Which US states offer scholarship contribution tax credits?

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There are now 18 states and a new federal program that offer businesses and individuals nonrefundable income tax credits for contributions to nonprofit scholarship-granting organizations. The nonprofits use the contributions to provide scholarships to eligible K-12 students to attend qualified schools.

• Alabama
• Arizona
• Arkansas
• Georgia
• Indiana
• Iowa
• Kansas
• Louisiana
• Missouri
• Montana
• New Hampshire
• Ohio
• Oklahoma
• Pennsylvania
• Rhode Island
• South Carolina
• Utah
• Virginia

Eligible students generally must come from low-income families. Some states have additional or other eligibility criteria. For example, both South Carolina and Utah provide credits to fund scholarships for students with special or exceptional needs.

What is a qualified school?

There are 15 states that limit scholarships to students who attend private schools in the state.

• Arizona
• Arkansas
• Georgia
• Florida
• Iowa
• Kansas
• Louisiana
• Montana
• Nevada
• Oklahoma
• Rhode Island
• South Carolina
• South Dakota
• Utah
• Virginia

Five states allow scholarships for students to attend either private or public schools. 

• Alabama
• Indiana
• Missouri
• New Hampshire
• Pennsylvania

Some of these states restrict scholarships to public schools located outside the school where the student lives.

Alaska has a broad education credit that includes contributions to nonprofit organizations for scholarships granted to dual-credit students. A dual credit student is a secondary level student in the state who simultaneously earns college and high school credit for a course. It can be applied to:

• Public and private K-12 schools
• Colleges and universities
• Vocational education and workforce training programs
• Apprenticeship programs
• Alaska native education and cultural programs

Florida’s credit applies to scholarships for:

• Tuition and fees at private schools; or
• Transportation expenses to public schools located outside the district in which the student resides.

How much are the credits?

The amount of the credits varies from state to state based on:

• All or part of the taxpayer’s contribution;
• All or part of the taxpayer’s tax liability for the tax year; or
• A specific dollar amount for each tax year.

Can taxpayers carryforward credits?

16 states allow taxpayers to carryforward unused credits.

• Arizona
• Arkansas
• Florida
• Georgia
• Illinois
• Indiana
• Iowa
• Kansas
• Louisiana
• Missouri
• Montana
• New Hampshire
• Oklahoma
• South Carolina
• Utah
• Virginia

Can taxpayers transfer credits?

Florida is the only state that allows taxpayers to transfer credits.

Can pass-through entities qualify for credits?

Pass through entities can qualify for the credits in 18 states.

• Alabama
• Arizona
• Arkansas
• Georgia
• Indiana
• Iowa
• Kansas
• Louisiana
• Missouri
• Montana
• New Hampshire
• Ohio
• Oklahoma
• Pennsylvania
• Rhode Island
• South Carolina
• Utah
• Virginia

What is the federal scholarship tax credit?

Beginning January 1, 2027, taxpayers may be eligible for a new federal Scholarship Tax Credit (FSTC) under Internal Revenue Code Section 25F for cash contributions of up to $1,700 to qualified Scholarship Granting Organizations (SGOs). The credit was created by federal legislation enacted in 2025 and is available only in states that elect to participate and submit approved SGOs to the IRS. Participating organizations must use contributed funds to provide scholarships for qualified elementary and secondary education expenses, including tuition, fees, books, supplies, tutoring, and certain other educational costs.

The federal credit operates separately from existing state scholarship contribution tax credit programs, meaning taxpayers may need to review how federal and state incentives interact in their jurisdiction. As states continue opting into the program, the IRS maintains an updated list of participating states and approved organizations to help taxpayers determine eligibility and claim the credit correctly.