Federal Scholarship Tax Credit
Answering Your Questions on the Federal Scholarship Tax Credit
The Worcester Regional Chamber of Commerce is calling on Governor Maura Healey and state leaders to formally opt Massachusetts into the newly enacted Federal Scholarship Tax Credit (FSTC) program.
Without state action, Massachusetts residents will continue to pay into this federal program, but their tax dollars will fund educational opportunities, after-school programs, and tutoring for children in other states, leaving our own families and local non-profits completely behind.
What is the Federal Scholarship Tax Credit Program
The FSTC is a unique federal initiative that enables individual taxpayers to redirect up to $1,700 of their existing federal tax liability directly to state-approved, non-profit Scholarship Granting Organizations (SGOs).
In return, donors receive a 100% dollar-for-dollar nonrefundable tax credit. This is not a typical deduction; it reduces your federal tax bill straight down to the penny. The SGOs then distribute these funds as educational scholarships to local families.
Who Qualifies for the Program
- Approximately 90% of Massachusetts families qualify.
- It is open to K–12 students whose household income is at or below 300% of the Area Median Gross Income (AMI).
- Local urban non-profits can expand their capacity to meet the massive demand for safe, educational after-school care.
- Business professionals, employees, and individual citizens gain direct agency over where their federal tax dollars are spent, ensuring they go directly to young people across the commonwealth.
When will FSTC exist?
Each state’s Governor has until the end of the year to officially submit IRS Form 15714, opting their state into the program. With over 23 states already opting in, we urge state leadership to allow Massachusetts to do the same.
How does the FSTC work?
Taxpayers contribute up to $1,700 to a state-approved Scholarship Granting Organization (SGO) and receive a 100% dollar-for-dollar federal tax credit.
Approved SGOs collect and manage the funds in compliance with federal and state guidelines.
The funds are distributed as scholarships to eligible students and are used to support educational opportunities such as private school tuition, tutoring, and after-school programs through participating non-profits.
However, Only States that Opt-in Can Utilize the Program.
Why Do We Want Massachusetts to Opt-In
This program represents a commonsense approach to education reform both nationwide, and here in Massachusetts. It also gives Bay Staters a rare opportunity to ensure that their federal tax dollars return to Massachusetts: providing much needed funding and assistance to our schools, tutoring programs, and non-profit organizations.
Should the administration choose not to opt into the federal program, the money already paid by our taxpayers will be redirected to other states, leaving local institutions empty handed. Furthermore, because the program is funded entirely through federal tax credits via private donations, it injects millions of dollars into our local communities without taking funds from the state.
This program is highly accessible, opening dollar-for-dollar tax credits up to individual citizens and benefiting approximately 90% of Massachusetts families (those making up to 300% of the Area Median Income). Therefore, a decision not to opt into the program would be detrimental to Massachusetts families and schools.
The tax credit officially goes live on January 1, 2027.