U.S. Treasury Announces Rules For Federal Scholarship Tax Credit, Governor Polis Celebrates that Public School Students Confirmed to Qualify

DENVER - Today, the U.S. Treasury announced proposed rules for the upcoming Federal Scholarship Tax Credit that starts January 1, 2027. These non-refundable tax credits allow Americans to donate up to $1,700 of their federal tax liability to scholarship granting organizations (SGOs) in participating states that help students access educational opportunities and support learning through efforts like after-school learning, tutoring, transportation, and more.

"Encouraging donations through federal tax credits will encourage Coloradans to give to charitable organizations and support public education here in Colorado, putting millions of more dollars towards kids learning through scholarships, tutoring, after-school support, and more. I am glad that today's rules clarify that these donations can support public school students and I look forward to providing further comments on these draft rules. I encourage Colorado non-profit organizations to get ready to sign up, and for Coloradans to donate using this tax credit once available next year," said Governor Polis.

Colorado is leading the way nationally to ensure all students, including those at public schools, will be able to benefit from the opportunities from this tax credit. New SGOs like the Colorado Public Schools Foundation, Denver Public Schools Foundation Opportunity Fund, and Learn Everywhere Fund will provide ample opportunity for taxpayers to donate funds that will benefit public school students across the state.

Today's proposed rules clarify that:

• Eligible taxpayers can earn an annual credit of up to $1,700 for qualifying contributions, or up to $3,400 for married couples filing jointly, with carryforward credit for up to five years;
• Qualifying elementary and secondary expenses can include academic tutoring, special needs services, books, supplies, computers and other equipment;
• An SGO may limit its scholarships for qualified expenses to specific subject matter areas such as science or foreign languages, or to students whose household income is less than 80% of area median income, for example;
• SGOs can provide streamlined eligibility to families participating in needs-based programs like SNAP, TANF, WIC, Section 8 housing, or SSI, foster children, and certain students receiving tutoring or special needs services in low-income areas;
• SGOs will not be required to collect social security numbers by donors and will be responsible for establishing reporting, verification, and audit requirements to prevent duplication of awards and reduce fraud and abuse.

Based on the updated rules released today, the Colorado Department of Revenue is updating its form for compiling Colorado's list of eligible SGOs, and will open that process in the near future. Colorado will submit its list of eligible SGOs to the Treasury ahead of January 1, 2027. For more information, and to sign up for notification on when the verification process opens, go to tax.colorado.gov/scholarship-granting-organizations.

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