The federal scholarship tax credit is genuinely new, and most CPAs will encounter it for the first time in client conversations before they encounter it in a filing. That is not a problem. It is an opportunity to walk in with the right questions and give your advisor time to plan around it with you. CEN SGO is the scholarship-granting organization where your gift lands. This article is about how to have that conversation well.
What to tell your CPA up front
Three things frame the whole discussion.
First, the credit is not live until tax year 2027. Contributions made on or after January 1, 2027, qualify. There is nothing to claim on a 2025 or 2026 return, so the planning conversation that starts now is for year-end 2027 giving.
Second, this is a tax credit, not a deduction. A deduction reduces the income your tax is calculated on. A credit reduces the tax itself, dollar for dollar, up to the annual per-taxpayer limit set in the law. The limit is being confirmed as final rules are issued. The distinction matters because it changes how your advisor models the benefit against your actual tax liability.
Third, you cannot claim both a charitable deduction and the federal credit on the same gift. One dollar, one benefit. Your advisor will want to know which is worth more in your situation, though for most donors the credit is the stronger choice.
The questions are worth bringing
These are the four most useful things to work through with your CPA before you give.
How much of my federal income tax can I redirect this year? The credit is non-refundable, which means it reduces your tax owed but does not pay out beyond your liability. A gift larger than your federal tax bill will not earn a full credit in year one. The law lets unused credit carry forward for up to five years, so a larger gift is not wasted, but knowing your liability helps your advisor size the gift you make in the first year.
Does my state have a scholarship program, and does it interact with the federal credit? The federal credit is reduced by any state credit claimed on the same dollars. States choose whether to participate in the federal program. If your state has both a state credit and participates federally, your advisor needs to model the interaction before you give. The credits do not fully stack on the same gift. For more on this, see How the SGO credit works alongside your state’s scholarship program.
Should I give now, at year end, or spread over several years? The carryforward is five years, so there is real flexibility. Your advisor may also consider your income, your bracket, and whether a larger gift this year or a series of smaller gifts across years makes more sense given your liability in each one.
Is there a school I want to support specifically? A donor may designate a participating school. That is a planning decision too, not just a values decision, because the school you name is the one your community of support can rally around. You cannot designate a specific student.
What your CPA will want to know about the SGO
Your advisor may not know the term SGO or the mechanics of this specific program yet. A few key facts help the conversation move faster.
CEN SGO is a qualified scholarship granting organization under the new federal law. It spends at least 90 percent of what it receives on scholarships. It is a 501(c)(3) nonprofit. Scholarships reach students at up to 300 percent of Area Median Gross Income, which covers most families.
The Brownstein Q&A guide is a rigorous resource built for advisors and sophisticated donors. The IRS has published its own guidance on the program. Sharing either with your CPA before the meeting is a fast way to bring them up to speed.
Frequently asked questions
Can my CPA claim this credit on my next tax return?
No. The credit applies to gifts made on or after January 1, 2027. There is nothing to file on a 2025 or 2026 return.
What if my gift is larger than my federal tax bill this year?
The unused credit carries forward for up to five years. Your advisor can plan around this if a larger gift makes sense for your situation.
Does my state’s scholarship credit change anything?
Yes, potentially. The federal credit is reduced by any state credit claimed on the same gift. Your advisor needs to model this if your state has both programs.
Where to go next
For the mechanics of the credit itself, read What is an SGO, and how does the federal tax credit work and The federal ECCA program explained, and why it matters now.
When you are ready to give, Get notified, and we will reach out to you the moment the 2027 window opens.
