In 2025, Congress enacted the Federal Scholarship Tax Credit (also known as the Education Freedom Tax Credit) under section 25F of the Internal Revenue Code. Beginning January 1, 2027, individual taxpayers may be able to claim a credit for certain cash contributions to scholarship granting organizations (SGO). States must elect to participate in the credit, and provide a list of SGOs in the state to the IRS. Once a state has made that election, an individual taxpayer may donate to a scholarship granting organization within that state and claim the credit. Colorado notified the IRS it intends to participate in the Federal Scholarship Tax Credit for tax year 2027.
The Colorado Department of Revenue will be responsible for compiling the state list of SGOs. The Department is currently waiting for further guidance from the IRS regarding its duties. Organizations that want to receive information from the Department about applying to be included on the state’s SGO list may sign up for email notifications by clicking on the link below. The Department will communicate with organizations that sign up below as soon as more information is available.
Individuals who want more information about the federal scholarship tax credit should refer to the IRS website (www.IRS.gov) and consult with their tax advisor. The Colorado Department of Revenue will follow the guidance issued by the IRS regarding donating to SGOs and claiming the credit and does not plan to issue separate guidance.