CEN is working to grow Christian education in every state. 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 tax credit fit with the tax credit my state already has? This page explains the difference between a voucher program and an SGO tax credit.
The federal credit is built to complement state education tax credits
Many states have their own education tax credits. The federal education tax credit does not replace them. It is designed to work alongside what your state offers, so families and schools can benefit from both.
States choose whether to participate in the federal program, so the way it pairs with your state depends on your state opting in. The federal credit is not live until tax year 2027. States still have time to opt in.
They are two, separate gifts
The gift you make with your state tax credit and the gift that you make with the federal tax credit are separate. 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 that amount. A donor and their tax advisor should look at both programs together to plan a gift that makes the most of each.
The federal credit is non-refundable 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 scholarship are not the same thing
A voucher
A voucher is state funds given to qualifying families for private school expenses. The state takes public money and gives it to families to pay for a school of their choice.
An SGO tax credit
An SGO tax credit works differently. A donor makes a personal gift to a scholarship granting organization, and in return receives a tax credit. The donor redirects part of what they already owe in taxes to a Christian school instead of the federal government. 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.
A voucher is public money moving to families. The SGO credit is voluntary gifts redirected from taxes. One is state funded. The other is a donor choosing where part of their own tax dollars go.
How it works in practice
A donor in a participating state gives to a federal 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 disburses 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. 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 credit?
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 tax advisor can help you plan for both.
Is the SGO scholarship the same as a school voucher?
No. A voucher is state funds given to a qualifying family to help with private school expenses. An SGO scholarship is a private gift from a donor to a scholarship granting organization that earns the donor a credit against taxes they already owe.
When can I start giving?
The federal credit is live in tax year 2027. Giving opens January 1, 2027.
Get notified when giving opens
The federal credit complements 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 for both.
For more information on the federal tax 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
