Education Freedom Tax Credit

The Education Freedom Tax Credit (EFTC) is a once-in-a-generation opportunity to expand scholarships for students in participating states. Beginning in 2027, individuals can contribute up to $1,700 and receive a federal tax credit for the full amount. Married couples can each contribute and claim the credit, for a combined benefit of up to $3,400.


Instead of those dollars going straight to the IRS, they can help fund scholarships that give students access to schools and learning environments that better fit their needs. 


A New Chapter in Catholic Education for Alabama


With the Education Freedom Tax Credit, eligible taxpayers can receive a 1:1 federal tax credit of up to $1,700 for supporting scholarship programs that help Alabama students succeed. Instead of sending those dollars to the IRS, your tax dollars can directly create another pathway for scholarship funding, helping more students access Catholic schools that may have previously been financially out of reach.


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Donors

Keep Your Tax Dollars Working in Alabama


Beginning in 2027, eligible taxpayers may receive a federal tax credit for supporting scholarship programs that help Alabama students succeed.


Family

Stacking Scholarships for Greater Access


EFTC can work alongside AAA scholarships and CHOOSE Act funding, helping families bridge the gap between available aid and the full cost of tuition.



Schools

Increase Enrollment Without Straining Existing Aid


The EFTC can help schools welcome more students by creating an additional source of scholarship funding, reducing pressure on existing tuition assistance programs.



How Does it Work?

  • Every taxpayer in America is eligible to donate to a non-profit scholarship-granting organization (SGO) to receive the tax credit. There is no annual aggregate cap nationwide.


  • Each taxpayer can donate up to $1,700 to an SGO and will receive a dollar-for-dollar federal income tax credit for that contribution. Married couples can each contribute and claim the credit, for a combined benefit of up to $3,400. This tax credit is operated out of the Department of the Treasury, not Department of Education.



What Should Donors Know?

  • Every taxpayer with a federal tax liability can make donations to an SGO in any state in the country that has opted in 


  • If a donor lives in a state that has NOT opted in, the donor can send their contribution out of state 


  • Donors cannot earmark scholarships for an individual student



  • Donors may earmark scholarships for particular schools 


What Should Schools Know?

  • Your diocese could see enrollment growth: As scholarships backed by these tax credits become available, schools that participate in the program may attract students who previously couldn’t afford tuition — broadening access and boosting Catholic education.


  • Builds on Alabama’s existing school choice programs: EFTC doesn’t replace what’s already in place — families eligible for state programs like the AAA scholarships or the CHOOSE Act can still use those benefits alongside federal tax-credit scholarships (subject to program rules). That effectively layers more financial resources for private school access. 


Keep Up with EFTC News and Updates:


A New Opportunity for Alabama Catholic Education

Beginning in 2027, a new federal program called the Education Freedom Tax Credit will allow taxpayers to receive a dollar-for-dollar federal tax credit when they donate to scholarship-granting organizations like the Alabama Opportunity Scholarship Fund.

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