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Who Can Receive a Scholarship? report cover, American Federation for Children
New Analysis

Who Can Fund a Scholarship?

Updated Donor Estimates under the New Federal Education Freedom Tax Credit (EFTC)

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Download Full Analysis Download Summary Find Your State's Fact Sheet Student Eligibility Report

WHAT THE NUMBERS SHOW

121.5M TAXPAYERS

An estimated 121.5 million tax filers, nearly three in four (74.2%), will be eligible to donate to a scholarship granting organization and claim the Education Freedom Tax Credit (EFTC) in tax year 2027.

61.3% FULL CREDIT

More than 60% of all filers (100.5 million tax units) could donate $1,700 and receive the maximum credit. Another 21.1 million owe less than $1,700 in federal income tax and could claim a credit up to their full liability.

2.6X PRIOR ESTIMATES

The eligible donor pool is more than double the 47 million in widely cited earlier estimates, which counted only filers earning above $85,000. Two-thirds (66.5%) of filers below that level who owe federal income tax will owe at least $1,700 in 2027.

$18.8B AT 10%

If one in ten eligible donors participates, the EFTC would raise $18.8 billion a year for K-12 scholarships. At 20% participation, $37.6 billion would exceed federal spending on Title I and IDEA combined.

31 STATES

The 31 states that have opted in or signaled intent to opt in are home to 68.3 million eligible donors with $104.9 billion in giving capacity (56% of the national total). The 20 jurisdictions yet to decide hold 53.2 million eligible donors and $83.0 billion, but their 20.8 million eligible students cannot receive a scholarship until their state opts in.

$65 PER PAYCHECK

Donors do not need to front the gift and wait for tax filing season the following year. Under existing withholding rules, any donor can reduce federal withholding on Form W-4 and make regular donations in the same amount. If donors reduce their W-4 withholding by about $65 per biweekly paycheck, they will give the full $1,700 to a local SGO over the course of a year and minimize concerns about reduced cash-flow upfront.

$160B CONSERVATIVE UPPER LIMIT

If every eligible donor gave the maximum the credit allows, giving would reach a theoretical upper bound of $160 billion a year under more conservative giving assumptions (see 2% of income affordability restriction in the brief) or $187.9 billion a year if every eligible donor gave the full $1,700 or their full tax liability, whichever is less. Both figures are upper bounds on the theoretical upper limit of available tax credits and are not projections.

+$75.1B IF JOINT FILERS CAN GIVE $3,400

Treasury has not yet ruled on whether married couples filing jointly may claim $3,400 per return. If it does, national giving capacity (100% participation) would rise by another $75.1 billion.

EFTC DONOR ELIGIBILITY CALCULATOR

EFTC Donor Capacity Calculator

How many tax credits can be claimed for donations to scholarship granting organizations through the Education Freedom Tax Credit?
Choose a jurisdiction and a scenario.

Click the advanced tab to vary participation rates across full- and partial-credit donors.

Build a scenario

Choose a jurisdiction

Pick a scenario

Percentage of Eligible Donors Who Participate 5%

One rate applied to all eligible donors. Open advanced details to set full-credit and partial-credit donors separately.

Advanced Details

Full-credit donors

Participation (tax bill ≥ $1,700) 5%

Partial-credit donors

Participation (tax bill under $1,700) 5%

The two sliders move independently: assume, say, partial-credit donors at 2% while full-credit donors give at 10%.

Giving assumptions

Affordability check
Giving rate (share of income)

Each gift = the smaller of $1,700 and the donor’s federal tax bill, the donor brief’s primary basis; at 100% participation this reproduces its $187.9B total capacity.

Results

Total raised $0 Tax Year 2027 dollars
Donors giving 0 of 0 eligible
Share of full capacity 0% of $0 at 100% participation

Where the donations come from

Full-credit donors Partial-credit donors

The math

Full-credit donors giving × average gift = $0
Partial-credit donors giving × average gift = $0
Total raised = $0

Group figures are rounded for display.

Notes & sources

What each control does

  1. Jurisdiction: scopes the scenario to one state or nationally. Donors are counted by residence; a donor may give to any participating state’s scholarship granting organization (SGO) regardless of where they live.
  2. Percentage who participate: the share of eligible donors who give. Any tax filer with federal tax liability is considered an eligible donor. Rate is applied to all donors equally; controls in the advanced details allow you to make separate assumptions for full-credit and partial-credit donors.
  3. Full-credit donors: the share of filers with a simulated 2027 federal income tax bill of $1,700 or more who give. Every one of them can claim the entire credit.
  4. Partial-credit donors: the share of filers who owe some federal income tax but less than $1,700. Their gift is limited by their tax bill.
  5. Scenario presets: one-click combinations of the two rates: Launch 2% & 0.5%, Growth 5% & 1%, Maturing 8% & 3%, Scale 20% & 20% (full-credit/partial-credit).
  6. Calculator giving assumptions: full-credit donors give the flat $1,700 and a representative share of partial-credit donors give their entire tax bill at a given participation rate. As a robustness check, the Affordability Check allows you to cap donations at a % of the donor’s income for a scenario where uptake of the individual W-4 giving route is not widespread and so middle-income donors are more constrained in their giving by cashflow / liquidity restrictions (i.e., more difficult to make cash donations to SGOs up front).

In every scenario, these projections assume tax filers will not give more than their federal income tax liability in the given tax year. A green ✓ marks a state that has signaled intent to or has opted in as of September 2026. Opting in governs where scholarships are funded, not who may donate.

Sources

  1. American Federation for Children Growth Fund, Who Can Fund a Scholarship? Updated Donor Estimates Under the New Federal Education Freedom Tax Credit (EFTC) (Sept. 2026), afcgrowthfund.org/s/AFCGF-Who-Can-Fund-a-Scholarship-EFTC-Eligibility-Report-s5t9.pdf.
  2. Donor pool and gifts simulated per filer under enacted 2026–2027 (OBBBA) tax law on U.S. Census ACS microdata, post-stratified to an income-migrated, growth-adjusted projection of the TY2027 IRS filer universe.
  3. Opt-in roster: 31 states as of September 2026, per AFC’s Federal Scholarships state opt-in tracker, federalscholarships.com.

Illustrative scenarios. Participation rates and the giving-rate assumption are user-set inputs, not AFC estimates or projections. Donor counts and capacity are the published, certified figures from the AFC donor-capacity analysis; this calculator shows potential fundraising, not a forecast and not a federal revenue estimate.

How THE EDUCATION FREEDOM TAX CREDIT works

SGO Awards a Scholarship

The SGO turns donations into scholarships for students who need them.

Student Receives a Scholarship

Funds cover educational costs: tuition, tutoring, books, and more.

Donor Claims the Credit

At filing, the donor claims a dollar-for-dollar federal credit of up to $1,700.

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