Last week, the Department of the Treasury released the long-awaited rules for new Federal Scholarship Tax Credit. The document contained a number of victories for families and reflected the culmination of months of advocacy efforts by Agudah and its coalition partners.

In a major breakthrough, the new rule clarifies that a married couple filing jointly may each donate $1700 and receive a combined $3400 tax credit. This decision alone will mean significantly more scholarships for students!

On Tuesday, Agudah held a briefing on the rules for the new Federal Scholarship Tax Credit with special guest Greg Dolan, Senior Advisor, Office of Tax Policy U.S. Department of Treasury.

The briefing included an overview of the tax credit, a Q&A, and a deep dive into the new regulations and how they will potentially affect scholarship granting organizations, schools, and communities.

What is the Federal Scholarship Tax Credit?

The FSTC allows individual taxpayers to contribute to a nonprofit scholarship granting organization (SGO) and receive a dollar-for-dollar tax credit worth up to $1700 per taxpayer ($3400 for married couples filing jointly). The SGO then pools the funds and distributes scholarships to eligible students for a wide range of K-12 educational expenses including private school tuition and tutoring.

Click here to view an easy to understand FAQ for donors and parents.

What Are the Income Eligibility Requirements to Receive a Scholarship?

Eligibility extends to students in families that are earning 300% or below of the median income in that area (see chart). Priority will be given to previous scholarship students and their siblings. Income threshold is adjusted for family size.