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UNDERSTANDING THE LAW
Federal Scholarship
Tax Credit Program
Signed into Law · July 2025
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| Federal legislation signed into law in July 2025 includes a historic expansion of K-12 educational opportunity that will benefit millions of students in all education settings for years to come. The statutory mechanism to affect this opportunity allows all individual income taxpayers, beginning in 2027, to take a 100 percent tax credit for donations to a non-profit Scholarship Granting Organization (SGO). |
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$1,700
Your Annual Donation to an SGO
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$1,700
Subtracted from Federal Taxes Owed
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What SGOs Fund
Scholarship Granting Organizations award scholarships to students to help pay for tuition, tutoring, supplies, technology, and other eligible educational expenses—putting resources directly in the hands of families.
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Tax Credit vs. Tax Deduction
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Tax Credit
Directly reduces the amount of taxes you owe, dollar-for-dollar.
No itemizing required
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Tax Deduction
Lowers your taxable income, indirectly reducing taxes owed.
Often requires itemizing
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THE “OPT-IN” REQUIREMENT
For Connecticut taxpayers to benefit from this tax credit,
Governor Lamont must take action to allow SGOs in the state to
receive qualified contributions before the
law takes effect.
Law Takes Effect: January 1, 2027
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Supporting educational opportunity for Connecticut's children
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UNDERSTANDING THE TAX CREDIT
How It Works: Bob's Example
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Example: Bob Donates $500 to an SGO in 2027
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WITH SGO DONATION
| Federal Income Tax Owed |
$10,000 |
| Scholarship Tax Credit |
–$500 |
| Bob Pays |
$9,500 |
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WITHOUT DONATION
| Federal Income Tax Owed |
$10,000 |
| No Donation Made |
$0 |
| Bob Pays |
$10,000 |
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Key Point: Bob does NOT make a profit—he simply redirects what he would pay in federal taxes to an SGO, helping more children access enhanced education. If Bob donated the full $1,700, he would owe only $8,300 in federal taxes. |
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What If Governor Lamont Does NOT Opt-In?
Bob can still receive a tax credit for donations to SGOs in states that have opted-in—but that money leaves Connecticut and benefits children in other states.
For example:
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CT NOT OPTED-IN $1,700 MONEY LEAVES CT ▶ IRS FEDERAL TAXES or FL OPTED-IN SGOS
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Connecticut taxpayers' donations will benefit children in other states instead of Connecticut children.
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Bob's money helps students either way—the question is whether it helps Connecticut's children or children in other states.
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Supporting educational opportunity for Connecticut's children
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