New Report Estimates 121.5 Million Taxpayers Are Eligible to Claim the Education Freedom Tax Credit in 2027

New tax credit to generate billions in giving potential for scholarship granting organizations 

DALLAS, Texas — A new report released today by the American Federation for Children (AFC) Growth Fund finds that 121.5 million taxpayers, or nearly three in four tax filers, will be eligible to claim a federal tax credit for donations to scholarship granting organizations (SGOs) through the Education Freedom Tax Credit (EFTC) beginning in 2027. The report is the first to estimate the full universe of eligible donors for the EFTC using updated IRS Statistics of Income data recently published at the end of August.

The state-by-state analysis updates previous estimates to include the full universe of eligible donors and details the EFTC’s potential to secure significant new funding for K-12 scholarships:

• For every 5% of eligible taxpayers who participate, funding for K-12 students across the country increases by $9.4 billion.
• If 10% of eligible taxpayers were to participate, the $18.8 billion raised would exceed the tax deductions and credits incurred each year from charitable gifts to all schools, colleges, and universities.
• If 20% of eligible taxpayers were to participate, the $37.6 billion raised would exceed current total federal spending on Title I and special education through the Individuals with Disabilities Education Act (IDEA).

This is an unprecedented opportunity for Americans across nearly every income level to reduce their federal tax liability and support public and private school students for educational expenses like tutoring, tuition, special education services, and other critical academic supports.

The analysis, written by AFC Growth Fund Senior Fellow Patrick Graff, Ph.D., extends research estimating that nearly 52 million students nationwide will be eligible for scholarships under the EFTC. The report published today examines the population of taxpayers with federal tax liability who will be eligible to make contributions to SGOs and receive a dollar-for-dollar federal tax credit in return.

The report aims to provide a robust estimate of donor capacity and is not a prediction of how much funding will be raised under the EFTC. Rather, it uses the most recent data available to calculate the size of the funding opportunity for scholarship organizations and K-12 student scholarship recipients, providing projections of scholarship potential based upon several giving ability and participation assumptions.

Statement by Tommy Schultz, CEO, American Federation for Children:

“The Education Freedom Tax Credit has created an unprecedented opportunity to open the doors of education freedom for families nationwide. Dr. Graff’s research demonstrates the life-changing difference taxpayers can make for American students by donating to a scholarship granting organization while reducing their own federal tax liability. We look forward to helping expand school choice nationally and bringing the EFTC to as many families as possible through the AFC Scholarship Fund.”

Statement by Dr. Patrick Graff, Senior Fellow, AFC Growth Fund:

“This research demonstrates the enormous potential of the Education Freedom Tax Credit. If participation scales to just 10% of eligible taxpayers over time, the EFTC could generate nearly $19 billion annually in new funding for K-12 education. That represents a significant new opportunity to expand scholarships for students and bring greater educational freedom to public and private school families across the country, including in states where school choice options remain limited.”

About AFC:

The American Federation for Children is the nation’s largest school choice advocacy organization and a leading force in advancing education freedom. AFC has helped pass more than 200 school choice laws nationwide, empowering families with meaningful options and elevating parent voices in education policy. The organization’s affiliated Super PAC, AFC Victory Fund, is focused on electing education reform champions at state and federal levels. The organization launched its affiliated national scholarship granting organization (SGO), the AFC Scholarship Fund, in 2026, to fully maximize this generational opportunity.