You do not have to give in the state you live in

This is the most common misreading of the credit we have run into, and we made it ourselves. An earlier version of this site opened with the question “Where do you file?” and used the answer to decide what you were allowed to see. That was wrong, and it would have turned away every donor in a state that has not opted in.

Where does the confusion come from?

The statute says an eligible organization must be “located in” a state that has elected to participate. That phrase attaches to the organization. Read at speed it lands as a general rule about geography, and geography plus tax sends most people straight to the question of where they file.

There is no donor-residency test anywhere in §25F. The only residency requirement on you is that you are a U.S. citizen or resident.

What does the rule actually gate?

Two things, both about the organization:

• It has to sit in a state that has opted into the programme. About thirty have for 2027.
• It has to appear on that state’s list of organizations, which the state files with the IRS.

So the test runs through the organization every time. An Ohio resident giving to an Ohio organization qualifies. A Michigan resident giving to that same Ohio organization also qualifies. An Ohio resident giving to a Michigan organization does not, because Michigan has not opted in.

Who does this actually matter to?

Anyone in a state that has not opted in, which is a large group. Several of the most populous states in the country are in it. If the credit were gated on your own state, tens of millions of taxpayers would be excluded outright.

They are not. They just have to give somewhere that participates, which for most people is not much of an imposition. Plenty of scholarship organizations serve students across a whole region.

Does giving out of state change anything else?

Not for the federal credit. One thing worth checking: several states run their own scholarship tax credits, and those usually do have residency and in-state requirements. If you were planning to claim a state credit as well, that part depends on your own state’s rules, and claiming one reduces the federal credit on the same gift.

How do you check?

Look at where the organization is. Our directory opens on every participating state at once for exactly this reason. States that have not opted in are greyed out instead of hidden, so you can see the limitation lands on organizations based there.

We got this wrong once. Writing it down seemed better than editing the page and saying nothing.