Federal Tax Credit · Public Schools · Effective Jan 1, 2027
Who is paying for tutoring now that ESSER is gone? There is a new answer.
The Federal Scholarship Tax Credit (FSTC) is not only a private tuition program. Under the statute, scholarship funds can pay for academic tutoring for public school students, including tutoring delivered at public schools, funded by donors, at no cost to your district budget.
Three facts most district leaders have not heard
Your students qualify
Students eligible to enroll in a public K-12 school, in households under 300% of area median income, which is the large majority of most districts' families.
Tutoring is a named expense
The statute lists academic tutoring among qualified expenses, including tutoring delivered at public schools. School-provided after-school and enrichment programs are covered as well. Whether off-site after-school and summer programs qualify is pending Treasury guidance.
It is not a voucher
Funds flow from private donors to nonprofit Scholarship Granting Organizations, and from those organizations to families. Nothing leaves your budget or your enrollment.
These expenses fall clearly within the scope of IRC Section 530(b)(3) and have been recognized in IRS guidance for Coverdell ESAs over multiple decades. Treasury Notice 2025-70 has not narrowed any of these categories.
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FundEDU has operated inside Pennsylvania's education tax credit, the state program the federal law was modeled on, for ten years. We help schools and districts build the donor and family infrastructure to be ready the day the window opens.
This page is informational and is not tax or legal advice. The federal credit is up to $1,700 per taxpayer per year, a planning figure pending final U.S. Treasury regulations. Scholarship availability depends on state participation, SGO capacity, and family application.
