CEN works to grow Christian education in every state it serves. CEN SGO is the program that brings the federal scholarship tax credit to your school and your community. A question we hear often: how does this new federal credit fit with the scholarship program my state already has? This page covers the general principle, and clears up a common mix-up between a voucher and an SGO tax credit.
The federal credit is built to pair with state programs
Many states already run their own scholarship programs. The federal scholarship tax credit does not replace them. It is designed to work alongside what your state offers, so families and schools can draw on both.
The federal credit is not live until tax year 2027. Donors will be able to give starting in January 2027, and the credit applies to contributions made after that point. States choose whether to participate in the federal program, so the way it pairs with your state depends on your state opting in.
The one rule on the same gift
There is a limit worth knowing. The federal credit is reduced by any state credit claimed on the same gift. You cannot count one dollar twice.
In plain terms: if you give to a scholarship granting organization and claim a state credit on that gift, the federal credit on that same gift is reduced by the state amount. The credits do not fully stack on the same dollars. A donor and their advisor look at both programs together to plan a gift that makes the most of each.
A few other confirmed facts shape the planning. The federal credit is non-refundable, so it offsets what you owe but does not pay out beyond your tax liability. Unused credit carries forward up to five years. And the same gift cannot also be claimed as a charitable deduction. For the deduction distinction, see Tax credit, not tax deduction: why the difference matters.
A voucher and an SGO credit are not the same thing
This is where a lot of confusion starts, so it helps to separate the two.
A voucher
A voucher is state funds routed to a family. The state takes public money and directs it to help a family pay for a school of their choice. The money starts as government funds and flows to the family.
An SGO tax credit
An SGO tax credit works the other way. A donor makes a voluntary gift to a scholarship granting organization, and in return receives a credit against taxes they already owe. No one is forced to give. The donor redirects part of what they already owe to a Christian school scholarship instead of the federal general fund. The gift is voluntary, the scholarship is funded by private generosity, and the credit makes that generosity cost nothing extra beyond what the donor already owed.
The difference matters for how you talk about it. A voucher is public money moving to families. The SGO credit is voluntary gifts redirected from taxes. One is the state spending. The other is a donor choosing where part of their own tax dollars land.
How it works in practice
A donor in a participating state gives to a scholarship granting organization. That gift becomes a scholarship for an eligible student. Students qualify at 300 percent of Area Median Gross Income, which covers most families. The SGO spends at least 90 percent of its income on scholarships. A donor may designate a participating school, though not a specific student.
If that donor also has a state scholarship program available, they and their CPA weigh both. The federal credit and the state credit each have their own rules, and the federal credit is reduced by any state credit on the same gift. Good planning gets the most out of both without double-counting a dollar. See Talking to your CPA about year-end giving through the SGO.
Frequently asked questions
Can I use both the federal credit and my state’s program?
In a participating state, the federal credit is built to work alongside state programs. The rule to remember is that the federal credit is reduced by any state credit claimed on the same gift. Your advisor helps you plan across both.
Is the SGO credit the same as a school voucher?
No. A voucher is state funds routed to a family. An SGO tax credit is a voluntary gift to a scholarship organization that earns the donor a credit against taxes they already owe. The source and the mechanism are different.
When can I start giving?
The federal credit is not live until tax year 2027. Giving opens in January 2027 for contributions made after that date.
Get notified when giving opens
The federal credit pairs with your state’s program starting in tax year 2027. Sign up and we will tell you the moment the window opens, so you can plan your gift across both.
For the full mechanics of the federal credit, see What is an SGO, and how does the federal tax credit work? and Resources.
Sources:
- IRS, Federal Scholarship Tax Credit (FSTC)
- Brownstein, Federal Scholarship Tax Credit: Q&A Guide
- EdChoice, Tax-Credit Scholarships
