Ways to fund a Christian education: the federal credit, 529s, ESAs and vouchers

Updated September 28, 2026 · 3 min read

Related guides:: Who qualifies for a scholarship What the scholarship pays for Two credits, two donations: state and federal
Tool:: Check eligibility

Four tools, four different mechanisms. Most families can use more than one.

In brief

The federal credit is funded by private donations. Families receive scholarships through the school.
A 529 plan is savings anyone can put money into. From 2026 it can pay up to $20,000 a year of K-12 costs.
ESAs and vouchers are state programs. Rules differ by state.
They can stack, but not on the same expense twice.

	Federal scholarship credit	529 plan	State ESA	State voucher or scholarship
Who puts money in	Donors, who get it back as a federal credit	Anyone, from after-tax money	The state	The state
Who holds it	The SGO, then the school	The account owner	The family's account	Paid to the school
Who qualifies	K-12 students, household income within 300% of area median	Any beneficiary	Varies by state	Varies by state, often income-tested
Pays for	Tuition, fees, tutoring, books, technology, special-needs services and more	K-12 tuition and other K-12 costs, up to $20,000 a year from 2026	Varies	Tuition, sometimes fees
Federal tax	Credit for the donor. Scholarship not taxable to the family	Growth is tax-free when spent on qualified costs	Varies	Not taxable

Where to start

Families: check whether your income is under the limit for your county, and whether your school is a CEN partner. Donors: check how much federal income tax you owe after other credits. Both take a few minutes with the eligibility check and the calculator.

The federal scholarship credit

Donors give cash to an SGO like CEN and take up to $1,700 off their federal tax. CEN awards scholarships to eligible students and pays the school. Families don't pay into it, and the scholarship isn't income to them. (Source: §25F(a), (c)(2), §139K)

529 plans

A 529 is a savings account for education. Parents, grandparents and friends can all put money in. Earnings grow free of federal tax when spent on qualified costs. For K-12, the annual limit rose from $10,000 to $20,000 in 2026. The list of K-12 costs also grew beyond tuition, to include things like curriculum, books, tutoring and test fees. State tax treatment varies. (IRS Topic 313)

State ESAs, vouchers and scholarships

These are state programs, paid from state budgets. An education savings account puts state money in an account the family spends on approved costs. A voucher or state scholarship pays a school directly. Who qualifies, how much, and what's covered depend on the state. Your state page has the specifics.

How they stack

A family can receive a federal scholarship, use a 529 for remaining costs, and take part in a state program where one exists. The limit is paying for the same expense twice. Treasury has said states will need steps to stop duplicate awards to the same student for the same expense. A state may also count the federal scholarship when sizing its own award. (Source: Treasury guidance preview, June 9, 2026)

Federal scholarship
Applied first to the family's tuition account at the school.
State program
Covers what its rules allow, and may count the federal award.
529 or family
Pays what's left, without claiming a cost the scholarship already paid.

One way the pieces can fit. Your school's business office and your state's rules decide the order.

Example. Tuition at a family's Christian school is $8,000. A CEN scholarship of $3,000 is paid to the school. A state program covers $2,000 under its own rules. The family pays the last $3,000 from a 529. No dollar of tuition is paid twice. Illustrative figures.

Which tool fits whom

You are	Tools to look at
A donor who wants to help families at a Christian school	The federal credit, plus your state's credit if it has one
A grandparent saving for one grandchild	A 529 for that child, and the federal credit for the school
A family paying tuition now	A CEN scholarship if you qualify, your state's program, then a 529 or your own funds
A family with young children	A 529 now, and a scholarship application when school starts

Common mix-ups

The federal credit is a voucher. It isn't. The money comes from private donations, and an SGO awards it.
Donors choose the student. They can choose the school. CEN chooses the students. (Source: §25F(d)(1)(E))
Families pay tax on the scholarship. They don't. (Source: §139K)
529s only work for college. They've covered K-12 tuition since 2018, and the 2025 law added more K-12 costs.

For donors: where the credit fits

A grandparent can fund a grandchild's 529 and also donate to CEN SGO. The 529 is for that one child. The CEN donation supports the school's scholarship fund, and CEN chooses the students. The credit can't be earmarked for a named child. For grandparents (Source: §25F(d)(1)(E))

Next step

Questions about this guide? See them on the FAQ page

Sources: §25F(a), (c)(2), (d)(1)(E); §139K; Treasury guidance preview, June 9, 2026; IRS Topic 313