How it works, in three steps

The federal credit turns part of the income tax you'd pay anyway into a scholarship. You donate to a scholarship granting organization (SGO) like CEN SGO. CEN awards scholarships to eligible students. The IRS takes your donation off your tax bill, up to $1,700. (Source: §25F(a), (b)(1))

Donations made on or after January 1, 2027 qualify. Donate in cash, which includes check, card, bank transfer and payroll deduction, up to $1,700 per taxpayer for the year. Stock and other property don't earn the credit. Donations before January 1, 2027 earn no federal credit. (Source: §25F(b), (c)(3))

When you donate, you choose the school. Your donation goes into that school's scholarship fund. The law bars earmarking a donation for a named student, so you pick the school and CEN picks the students. (Source: §25F(d)(1)(E))

Your donation has to stay in the state where CEN is listed for it. The law says a qualifying donation funds scholarships only within that state. So a donation to an Ohio school funds Ohio students. (Source: §25F(c)(3))

CEN sends you a written acknowledgment. It shows the date, the amount, your designated school and your donor number. Keep it. You'll need it at tax time. What your receipt shows

When and how much

The credit counts donations you make during the tax year. For most people that's the calendar year, so a donation made any day from January 1 to December 31, 2027 counts on the 2027 return. Some state credits let you donate up to the April filing deadline and still count it for the year before. The federal credit doesn't. (Source: §25F(a), Ohio R.C. 5747.73(B))

You can donate once or spread it out. Monthly donations add up across the year, and the credit is based on the total. You can donate more than $1,700, but only $1,700 comes back as a credit. If you'd like to be ready on day one, pledge your donation now. A pledge isn't a payment and earns nothing until you donate.

Families at the school apply to CEN. A student qualifies if they're eligible to enroll in a public K-12 school and their household income for the prior year is at or below 300% of their area's median income. That covers most working families. (Source: §25F(c)(2))

CEN verifies income, and asks for the least it needs. When there are more eligible students than dollars, the law sets the order: students who had a CEN scholarship last year come first, then their siblings. Who qualifies (Source: §25F(d))

Scholarships are paid directly to the school and credited against the family's tuition account. They don't come to the family as cash, and they aren't taxable to the family. What the scholarship pays for (Source: §139K)

The law also sets rules for CEN. It must keep donations for the federal credit in a separate account. It must spend at least 90% of its income on scholarships, fund at least ten students at more than one school, and never award a scholarship to a disqualified person, such as an insider. (Source: §25F(c)(5)(B), (d))

You claim the credit on your federal return for the year of the donation. For a 2027 donation, that's the return you file in spring 2028. The IRS hasn't published the form or schedule yet. It will need to before the 2028 filing season. How donors claim the credit

The credit lowers your tax bill dollar for dollar. It isn't a deduction, so it works whether or not you itemize. It's non-refundable: if you owe less than your donation, the rest carries forward for up to five years. You can't also deduct the same dollars as a charitable donation. Credit vs deduction (Source: §25F(a), (e), (f))

The credit is federal, so donors in any state can donate and claim it. The scholarships only reach students in states that have opted in. A state joins by filing an election with the IRS and sending Treasury its list of SGOs. As of September 14, 2026, 30 states had filed. Every state's status (Source: §25F(g), IRS FSTC program page)

• Donating in December 2026 and expecting the federal credit. It starts with donations on January 1, 2027.
• Donating stock or crypto for the credit. Only cash counts.
• Asking for a named student. You can choose the school, not the child.
• Claiming a state credit on the same donation. You can't claim a federal and state credit on the same funds. Make separate donations.
• Throwing away the acknowledgment. It carries the donor number you'll need to claim.