Questions
Including the ones without settled answers, which are marked as such.
The credit
- What is the Education Freedom Tax Credit?
- A federal tax credit for giving cash to an approved K-12 scholarship organization, worth up to $1,700 a year. Congress created it in 2025 and it applies to gifts made from 2027 onward. The IRS calls it the Federal Scholarship Tax Credit. In the tax code it is section 25F.
- How is a credit different from a deduction?
- A deduction reduces the income you get taxed on, so it saves you your marginal rate. A credit comes off the tax bill itself. Give $1,700 and, if you owe at least that much, your bill drops by the full $1,700.
- What does nonrefundable mean here?
- It can reduce what you owe to zero, and no further. If your federal bill is smaller than what you gave, the difference does not come back as a refund. You can carry unused credit forward for up to 5 years.
- Is this a charitable deduction too?
- No, and you have to pick one. You cannot take the §25F credit and also deduct the same gift as a charitable contribution. If you claim a state credit on the same gift, that reduces the federal credit as well.
- I file jointly. Do we each get one?
- Unsettled, and we will not pretend otherwise. Commentary leans toward the ceiling applying per return, meaning one $1,700 for the household rather than two. The statute is not clear and Treasury has not resolved it. Ask your tax professional before you both give.
Choosing an organization
- Do I have to give in the state I live in?
- No. §25F puts no residency requirement on donors. What matters is that the organization sits in a state that has opted in. You can live in a state that has not opted in and still give to an organization in one of the 30 that have.
- What is an SGO?
- A Scholarship Granting Organization. A nonprofit that awards K-12 scholarships. For §25F it has to spend at least 90% of its income on scholarships and serve ten or more students who are not all at one school.
- Why does everything say expected or unverified?
- Because no organization is federally approved yet. States have to file their lists with the IRS before January 1, 2027, and none has. Until a listing can be checked against a published official source, we say so on the card rather than implying an approval that does not exist. See the directory.
- Where did these organizations come from?
- Public IRS Business Master File data, which establishes that an organization exists, its EIN, and that it is tax exempt. It establishes nothing about §25F. Every record carries its source, and staff verify against official state lists as those get published.
- Do you rank or rate them?
- No. We show where a listing came from, how it was checked, and when. The judgement is yours. If a third-party rating appears on a profile it belongs to whoever produced it, not to us.
Money and records
- Does SGO Direct hold my contribution?
- No, and the payments are built specifically so it cannot. Stripe settles the charge into the organization’s own connected account. Your card statement shows their name. There is no point in the flow where the money sits with us.
- Will you ask for my Social Security number?
- Never. Treasury has signalled that donors will get an IRS-issued number for this instead. There is no field anywhere in this product that accepts an SSN, and input that looks like one gets rejected.
- What does the receipt include?
- The organization’s legal name and EIN, your name and address, the amount, the date, the tax year, the transaction ID, and whether the organization has confirmed it. When the IRS settles the required acknowledgment language we reissue, and your original version stays on file.
- What if I need a refund?
- Ask the organization. They are the merchant of record, so refunds are theirs to issue. When one comes through, we record it as a correction against your gift and your credit total updates. We never edit the original amount.
- Do you charge me a fee?
- No. Nothing is added to what you give. If a service fee applies it is paid by the organization, and today it is switched off entirely, because how the IRS will treat a third-party fee taken out of a qualified contribution is one of the open questions.
SGO Direct is an independent technology platform and is not affiliated with the IRS, U.S. Treasury, or any state government.
Tax treatment depends on applicable law and individual circumstances. Consult a qualified tax professional.