The $1,700 Federal Education Tax Credit Is Almost Here. Whether It Reaches Your Homeschool Depends on Your State's Wording.
A new federal scholarship tax credit takes effect on January 1, 2027, and homeschool families keep hearing two contradictory things about it: that homeschoolers are covered, and that homeschoolers are shut out. Both are wrong, and the truth is more useful than either.
Here's where things actually stand as the rules get written.
What the program is
Section 25F of the tax code, created by the One Big Beautiful Bill Act in 2025, doesn't send money to families directly. It works through donors and nonprofits.
Starting in 2027, an individual taxpayer can claim a nonrefundable federal tax credit of up to $1,700 for a cash contribution to an approved Scholarship Granting Organization, or SGO. The SGO then awards scholarships to eligible K–12 students. The credit is dollar-for-dollar against what you owe, but it won't generate a refund — and any unused portion carries forward for up to five years.
Two gates stand between the law and your family:
Your state has to opt in. A state must elect to participate and give the IRS a list of qualifying SGOs located there. Students in states that don't opt in can't receive these scholarships, though donors in those states can still claim the credit by giving to an SGO elsewhere — funding students in other states.
Your household has to qualify. Scholarships go to students whose household income doesn't exceed 300% of the area median gross income, and who are eligible to enroll in a public elementary or secondary school. That income ceiling is generous in most parts of the country — this is not a narrow low-income program.
The homeschool question, stated correctly
On June 9, 2026, Deputy Assistant Secretary for Tax Policy Kevin Salinger previewed the forthcoming rules in remarks Treasury published the next day. On the definition of an eligible "school," the preview was direct: the definition will cover public, private, and religious K–12 schools as defined by state law, and a home school will be treated as a school if it is treated as a school under state law. Schools run by federally recognized Tribes are in as well.
So the federal government is not writing homeschoolers out. It's handing the definition to the states — all fifty of them, each with its own statute and its own legislative calendar.
That's why the answer to "are homeschoolers eligible?" is genuinely different depending on where you live. Some states define a home school as a nonpublic or private school. Others route home instruction into a separate legal category and specify that it is not a school. Same federal law, opposite result.
There's a second, narrower question sitting underneath the first: what counts as a qualified expense. Section 25F doesn't define the term itself — it leans on definitions used elsewhere in the code for education accounts. Treasury has signaled that expense guidance is a separate workstream, expected after the main regulations. Questions about hybrid programs, co-ops, and part-time enrollment will likely be answered there, not now.
And one more thing worth saying plainly to anyone doing math on next year's curriculum budget: being an eligible student never guarantees an award. SGOs decide who gets scholarships, under their own policies. Eligibility is permission to apply.
What's happening this month
Treasury committed to issuing proposed regulations no later than the end of September 2026 — which means, as you read this, they may be days away or just out. The significant part is that states, SGOs, and taxpayers will be allowed to rely on those proposed rules for the 2027 tax year, rather than waiting for final regulations. Proposed regulations also carry a public comment period, which is the open door for homeschool organizations to weigh in on how "school" gets applied in practice.
On the state side, more than half the country has already filed the advance election to participate for 2027, using IRS Form 15714. The IRS maintains the official list of participating states on its Federal Scholarship Tax Credit page, and it's the only list worth trusting — advocacy trackers and state websites lag behind it.
California families: two separate questions
California has not opted in. Governor Newsom has not announced a decision, and a legislative resolution (ACR-229) has urged him to submit the state's election, citing an estimate that California could draw billions in scholarship contributions between 2027 and 2029. Nothing has been decided. The choice is also annual, so a "no" for 2027 isn't permanent.
That's the first question, and right now it's the one that controls everything else for California students.
The second question — whether California homeschooling counts as a "school" — is the one families should understand before the first one gets answered. Most California homeschoolers educate under a private school affidavit, operating as a small private school under state law. Families enrolled in a public charter independent study program are in a different posture entirely, since those students are public school students. If California ever opts in, that distinction is likely to matter a great deal.
What to do now
Nothing about this program requires action from families in 2026. But a few things are worth doing while the rules settle:
Find out how your state's homeschool statute is actually written. Not its reputation, not how friendly it is overall — the specific legal category your family files under. That wording is the hinge.
Watch the IRS list, not the headlines, for whether your state has opted in.
Keep your records. Curriculum receipts, tutoring invoices, class fees. If expense guidance lands in your favor, documentation you already have is worth more than documentation you have to reconstruct.
Ask any SGO you're considering how it plans to handle homeschool eligibility once the rules are final. Their answers will tell you a lot about how this plays out locally.
The program is real, the timeline is firm, and the money is meaningful. What's still unwritten is the part that decides whether it reaches your kitchen table — and for the next few weeks, that part is being written in public.
This article is general information, not tax or legal advice. Rules are still in the proposed stage and may change before the 2027 launch.