FSTC School Readiness Guide

Where a private school should start on the Federal Scholarship Tax Credit (FSTC), based on the rules Treasury and the IRS released on Oct. 2, 2026.

Quick Start

Get our readiness guide with the six steps and your county's income limits.

Takes 30 seconds

Personalized Guide

Take a 10-minute assessment and get a guide built for your school's strengths and gaps.

An action plan, gaps first
Guidance for each area the assessment covers

Start Assessment

Takes about 10 minutes

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School Name *

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Email me about my state's opt-in status, new resources and upcoming deadlines.

FundEDU has connected Pennsylvania schools with education tax credit programs since 2016.

The 12-page PDF guide

FSTC program overview and timeline
School readiness self-assessment
Step-by-step preparation checklist
Income eligibility thresholds

Your six steps

Each step says what the rules settle and what your school can do about it. For what scholarships can pay for, see eligible expenses.

1. Name one person to lead

That person tracks Treasury and IRS guidance and passes it to each office that needs it.
Someone who already handles compliance, financial aid or development is a good fit.
Sign up for official IRS.gov and Treasury.gov notices now.
Waiting on guidance The list of covered expenses and the IRS income tables have not been published yet.
Track the public comment period on the proposed rules. Comments are due Dec. 1, 2026.

2. Find an SGO on your state's list

Set Donors give to a scholarship granting organization (SGO), not to a school, and the SGO awards the scholarships.
Set An SGO must be on your state's list. An existing state scholarship organization does not qualify automatically, so ask whether it is on the list.
Set By law an SGO must spend at least 90 percent on scholarships. Ask about its fees and how it reports to schools.

3. Estimate how many of your families qualify

Proposed The income limit depends on household size, lower for smaller households and higher for larger ones. The program in brief on this page shows how it works.
Proposed Where a student lives, not where the school is, sets the area. A student must live in a state that has opted in, with exceptions for military families and students on Indian lands.
Proposed Families can show they meet the income limit with an award letter for SNAP, TANF, WIC, Section 8 or SSI. Children in foster care count as meeting it.
Start from your financial aid files and check families with the income calculator.
Write the estimate down. SGOs and donors will ask for it.

4. Get the business office ready

Proposed The SGO pays tuition directly to the school, and the school returns any overpayment. Plan how your business office will receive these payments and handle refunds.
Create a separate tracking category for FSTC scholarships in your tuition management system.
Map how FSTC scholarships sit beside state scholarships and your own need-based aid, so no cost is counted twice.
Tell admissions and development staff what they will need to do.

5. Line up donors

Set Donors give to an SGO, not to a school. Only cash gifts, designated as FSTC gifts when they are made, earn the credit.
Proposed Up to $1,700 per taxpayer. Under the proposed regulations, spouses filing jointly are treated as separate taxpayers, so a couple can claim up to $3,400 if each spouse gives at least $1,700.
Set A state tax credit for the same gift reduces the federal credit.
Waiting on guidance Whether a donor can direct a gift to a particular school is not addressed in the rules.
Likely donors include parents, grandparents, alumni, congregation members and local business owners.

6. Talk with families now

When families ask where the money comes from, start with how it moves through an SGO (step 2).
Set The program is permanent, written into the federal tax code.
Say which parts are set, which are proposed and which are waiting on guidance, even before the rules are final.

What's Next?

Income calculator Estimate the income limit for a household of any size in your county. Help your state opt in Letter templates for your governor and legislators, talking points and a mobilization guide. State status map See where your state stands on opting in.

The program in brief

Each rule below carries one of three tags.

Set The law, or the temporary rules now in force.
Proposed The proposed rules, which could change after public comment.
Waiting on guidance The rules leave it for later guidance, or do not address it.

Donors

Set Cash gifts to a scholarship granting organization (SGO), designated as FSTC gifts when they are made, earn a federal tax credit.
Proposed Up to $1,700 per taxpayer. Under the proposed regulations, spouses filing jointly are treated as separate taxpayers, so a couple can claim up to $3,400 if each spouse gives at least $1,700.
Set A state tax credit for the same gift reduces the federal credit.
Set Gifts go to an SGO, not to a school.
Waiting on guidance Whether a donor can direct a gift to a particular school is not addressed in the rules.

Students

Set A student must be eligible to attend a public school, so public and private school students can both qualify.
Set Household income may not exceed 300 percent of the area's median income.
Proposed That limit is adjusted for household size, as explained below.
Proposed A student must live in a state that has opted in. Where the student lives sets the area, with exceptions for military families and students on Indian lands.

SGOs

Set SGOs are charities on a state's list that spend at least 90 percent on scholarships.
Set No scholarship money may be earmarked for a particular student.
Proposed Tuition is paid directly to the school, which returns any overpayment.

States

Set States opt in one year at a time.
Set For 2027, the election is due by Jan. 1, 2027 and the SGO list by Feb. 15, 2027.

What scholarships pay for

Waiting on guidance The list of covered expenses waits on separate Treasury guidance.
Proposed Tutoring and special-needs services are named in the proposed rules.

Dates

Public comments are due Dec. 1, 2026. A public hearing is set for Dec. 15, 2026, if anyone asks to speak by the comment deadline.

How the income limit works

Proposed The limit is three times the area's median family income, scaled by household size. A household of four gets the full amount; smaller households get less and larger households more.

Household size and multiplier
People in the household	Multiplier
1	0.70
2	0.80
3	0.90
4	1.00
5	1.08
6	1.16
7	1.24
8	1.32
More than 8	1.32, plus 0.08 for each person over eight

Proposed Everyone living with the student counts, related or not, including several generations of a family.
Proposed In shared custody, the student belongs to the household where the student lives longest. If the time is equal, it is the household with the higher income.
Proposed Income means cash income from the calendar year before the application. Child support and alimony count; an imputed return on assets does not.

In their economic analysis of the proposed rules, Treasury and the IRS estimate that with these income rules, 96 percent of children in states that have elected to take part will be eligible for these scholarships.

Waiting on guidance The IRS has not yet published its official tables of limits by area and household size.
Waiting on guidance The IRS has not said whether those tables will follow HUD's adjusted published limits or the straight formula.
Waiting on guidance The rules do not say which year's table applies to an application.

Check your families with the income calculator. Its figures are estimates until the IRS publishes its tables.

FSTC Readiness Guide for Public Schools The companion guide for districts and public schools, in five steps.

Nothing here is legal or tax advice. The rules, and any later guidance, control.