New Treasury and IRS guidance provides greater clarity as states, donors and Scholarship Granting Organizations prepare for the program’s January 1 launch.
CONCORD, N.H. (October 1) – New Hampshire families, donors and schools now have a much clearer picture of how the Federal Scholarship Tax Credit (FSTC) will work when it launches January 1, 2027.
On October 1, the U.S. Department of the Treasury and Internal Revenue Service released proposed regulations, along with companion temporary regulations, filling in important details about how the program will operate and how states, taxpayers and Scholarship Granting Organizations (SGOs) can prepare for its launch.
For New Hampshire families, the new rules also underscore the breadth of the opportunity. Students can benefit across educational settings, including in public schools.
Treasury identifies a broad range of qualified expenses, including academic tutoring, services for students with disabilities, books, supplies, computers and other educational needs. Its guidance specifically points to tutoring for students in public schools, while private school tuition is another eligible use.
In practice, that means a New Hampshire family could use a scholarship for additional reading or math tutoring, specialized services, educational technology or another resource tailored to their child’s needs. The common denominator is not the type of school a child attends. It is meeting the needs of the individual student.
How the tax credit works
Beginning in 2027, taxpayers can receive a federal income tax credit of up to $1,700 for qualified contributions to SGOs, while married couples filing jointly can qualify for up to $3,400 in combined credits.
Unlike a tax deduction, which reduces the amount of income subject to tax, the FSTC directly reduces the amount of federal income tax a taxpayer owes, dollar for dollar, up to the applicable limit. Although the credit is nonrefundable, the proposed rules would allow unused amounts to be carried forward for up to five years. Taxpayers also have flexibility in how they contribute, with qualifying methods including checks, credit or debit cards, electronic transfers and after-tax payroll deductions.
Those contributions are an important part of how the program works. The FSTC does not take funding out of New Hampshire public school or school district budgets. Instead, it creates a new source of privately contributed scholarship funding for New Hampshire students. Individuals make private contributions to SGOs, which then use those contributions to fund scholarships.
Those resources are not limited to students outside the public school system. Students attending public schools can benefit too, using scholarships for qualified expenses such as tutoring, services for students with disabilities, books, supplies and educational technology. The new guidance also establishes detailed reporting, oversight and accountability requirements for SGOs as the program prepares to launch.
New Hampshire is ready to build on what works
New Hampshire has been preparing for this opportunity throughout 2026. Gov. Kelly Ayotte announced on January 29 that the state would participate in the FSTC and signed HB 1774 on July 2, establishing responsibilities for implementing the program in New Hampshire. The state has since completed its advance election, one of the key steps toward making the program available to New Hampshire families in 2027, with additional implementation work underway ahead of January 1.
Children’s Scholarship Fund New Hampshire (CSF) brings years of experience to that effort. CSF already administers New Hampshire’s Education Tax Credit (ETC) Scholarship Program and has administered the Education Freedom Account (EFA) program since its inception in 2021. Through that work, CSF has developed the systems, relationships and expertise needed to work with families, donors, schools and education providers as the FSTC gets underway.
“Today’s guidance gives New Hampshire much greater clarity as we prepare for the FSTC to launch in January, and it reinforces just how broad this opportunity can be for families,” said Kate Baker Demers, Executive Director of Children’s Scholarship Fund New Hampshire. “Education freedom is about recognizing that every child is different and putting more resources within reach of families. Whether a student needs tutoring in a public school, specialized services, educational technology or help accessing a different educational setting, the goal is the same: helping that child thrive.”
The opportunity to support New Hampshire students also extends beyond the state’s borders. The FSTC allows taxpayers to contribute to an eligible SGO regardless of where they live, meaning someone outside New Hampshire can choose to support scholarships serving students here.
The potential reach is significant. Treasury and the IRS estimate that, under the proposed rules and eligibility safe harbors, approximately 96% of children in participating states could be eligible to receive scholarship funds. By 2030, they estimate that the program could generate nearly $26 billion in qualified contributions annually and support as many as 2.2 million scholarships each year.
For New Hampshire, that means the potential for significant new privately contributed resources to support children across the state, whether they attend a public, charter, private or other educational setting. Because education freedom is ultimately not about supporting one type of school over another: it is about supporting students.
