A new federal scholarship tax credit taking effect in 2027 could help families pay for educational services, including some services for students with disabilities, but Illinois must participate for in-state scholarship organizations to take part. The Federal Scholarship Tax Credit, also known as the Education Freedom Tax Credit, provides taxpayers a nonrefundable federal tax credit for qualifying donations to scholarship-granting organizations. The credit is generally up to $1,700 per individual taxpayer annually. Scholarship money can be used for qualifying K-12 educational expenses, including tuition, tutoring, technology and special-needs services. Eligible students generally must come from households earning no more than 300% of their area’s median income.
Supporters say the program could provide additional assistance for students with disabilities, including help with educational therapies, evaluations, tutoring and assistive technology. Public schools are already required under federal law to provide eligible students with disabilities with appropriate special education and related services.
Illinois has not yet elected to participate, according to the IRS’s current list of participating states. The Pritzker administration previously said it was reviewing the program and considering its potential effects on students, families and public schools. Beginning January 1st, taxpayers will be able to make qualifying contributions to scholarship organizations in participating states, including organizations outside their own state.
The program is scheduled to launch nationwide in 2027, with states choosing whether to participate and identifying qualifying scholarship-granting organizations.