The law is IRC Section 25F, enacted through the One, Big, Beautiful Bill Act (P.L. 119-21), signed July 2025. It's the first-ever federal school choice tax credit in American history.

Before this, similar programs existed at the state level in Arizona, Florida, and others. Section 25F takes it national: any U.S. taxpayer can now contribute up to $1,700 to a qualified SGO and receive a dollar-for-dollar credit against their federal tax liability. Married taxpayers filing jointly may claim a combined credit of up to $3,400.

A deduction reduces your taxable income. A credit reduces your actual tax bill, dollar for dollar.

For example: If you're in the 22% bracket and donate $1,700, a deduction saves you about $374. A tax credit saves you the full $1,700, because it comes directly off what you owe the IRS. Married couples filing jointly can claim up to $3,400, meaning a household contribution of $3,400 costs nothing out of pocket if the couple has at least $3,400 in federal tax liability.

No itemizing required. No income ceiling. W-2 employees, self-employed, retirees: anyone with a federal tax liability qualifies.

One thing worth knowing: the credit is nonrefundable. If your federal tax liability is less than $1,700 (or $3,400 for married filing jointly), you can carry the unused credit forward for up to five years.

Almost any U.S. taxpayer qualifies. You do not have to live in Colorado or know a student. A grandparent in Florida, an alum in New York, your friend that lives next door with no kids, a colleague who cares about education: anyone with a federal tax liability can contribute to Sunnyside Rising and claim the credit.

The only requirement: you must have a federal tax liability to offset. If you owe nothing, there is nothing to credit. Unused credits carry forward for up to five years.

Sunnyside Rising serves public, charter, private, religious, and homeschool communities across all 64 Colorado counties as equal partners. Homeschool students in Colorado are eligible only where the student is enrolled in an independent or parochial school for at least 172 days a year, or attends a public school for part of the school day. Contact us to confirm eligibility in your situation.

See the homeschool question below for how this works in Colorado.

To be eligible, a student must meet both criteria:

• The student is eligible to enroll in a public elementary or secondary school.
• The student is a member of a household with income at or below 300% of the area median gross income for the calendar year prior to the scholarship application.

Treasury is also establishing streamlined eligibility verification for certain families already receiving needs-based benefits, foster children, and students receiving tutoring or special-needs services in low-income areas, meaning many families will not need to complete a separate income-verification process. Treasury estimates that approximately 96% of children in participating states would be eligible under these rules.

Donors can designate a preferred school when they contribute. Funds designated to that school are held in a dedicated, segregated account, as required by the statute, for that school's eligible students and qualified expenses.

One more thing families should know: scholarship amounts received by eligible students are excluded from gross income under IRC Section 139K. The scholarship is not taxable to the family.

It depends on how your student is enrolled. The credit covers expenses tied to a student's enrollment at a public, private, or religious school, and federal law leaves the meaning of "school" to each state. Colorado does not treat a home-based educational program as a school, so a student taught at home with no school enrollment behind it is not eligible under current law.

A student enrolled in an independent or parochial school for at least 172 days a year, or attending a public school for part of the school day, may be eligible. Contact us and we will confirm where your family stands.

Federal guidance is still being written, and Colorado's definition is set by state law. We will update this page if either changes. We cannot predict whether or when that will happen.

Scholarship funds are restricted to qualified elementary and secondary education expenses as defined in IRC Section 530(b)(3)(A). These include:

• Tuition and fees for enrollment or attendance at a public, private, or religious school
• Academic tutoring and special needs services
• Books, classroom supplies, and other instructional equipment
• Room and board, uniforms, and transportation required by the school
• Enrichment programs and extended day services required or provided by the school
• Technology, computers, and internet access to be used by the student during school years (educational purposes; excludes software designed primarily for sports, games, or hobbies)

What scholarship funds cannot cover: general school operations, staff salaries, facility maintenance, or administrative overhead.

The specific qualified expenses available at any school depend on the eligible-expense plan submitted and approved for that school. Treasury has issued proposed regulations for Section 25F. Taxpayers, states, and SGOs may rely on these proposed regulations for qualified contributions beginning January 1, 2027. Sunnyside Rising is reviewing the full regulations and will update this page with any additional detail. Conditions apply to some expense categories, including dual enrollment program fees and standardized test fees. If you are planning around a specific expense type, ask us before committing.

Here is how it works at Sunnyside Rising:

By law, at least 90 cents of every dollar contributed funds educational resources for students.

Colorado has over 940,000 K-12 students learning in public, charter, private, and religious settings. Here is what the math looks like if just one person donates the $1,700 maximum for each student in a given school type:

That is the floor, not the ceiling. IRC Section 25F has no national funding cap. The ceiling is community participation, and that's exactly what we're built to generate.

No national cap. No pool that runs out. The only limit is per taxpayer: up to $1,700 per donor, per year. Unused credits carry forward for up to five years.

The more donors who participate, the more students benefit.

Yes. Colorado made a formal advance election to participate in IRC Section 25F ahead of the January 1st, 2027 launch. Sunnyside Rising is positioning for Colorado's approved SGO list ahead of that date.

Contributions qualify for the credit starting January 1st, 2027. Pre-register now and we'll have your paperwork ready the day the credit opens.

If you are a W-2 employee, you can adjust your federal withholding now so the tax savings show up in your paychecks before you ever write the check to Sunnyside Rising.

No, and the difference matters to your donor.

A direct charitable donation costs your supporter that dollar. A contribution through Sunnyside Rising costs them close to nothing, because it's a dollar-for-dollar credit against federal taxes they already owe. If a donor contributes $1,700 and owes at least $1,700 in federal taxes, their tax bill drops by $1,700. They can do it again every year.

One important distinction: unlike a direct gift, SGO contributions are restricted to qualified educational expenses for income-eligible students. They cannot be used for things like general school operations.

So the right answer for most schools is both. Keep your direct fundraising for operating flexibility. Add the Federal Scholarship Tax Credit as a separate, restricted pool for instructional resources. For most donors, the credit costs them nothing extra; it doesn't compete with money they'd already earmarked for you.

Yes, and here's the distinction worth knowing.

The law itself (IRC Section 25F(d)(1)(E)) prohibits an SGO from earmarking contributions for any particular student. But the law does not prohibit school designation. Those are two different things.

Sunnyside Rising allows donors to designate a preferred school. When they do, their contribution goes into that school's own dedicated, segregated account, not a general pool. School designation is at the center of our model. We built the controls to make it real.

What we cannot do, and do not do: ensure that a specific donor's contribution reaches a specific student. The statute prohibits that. What we can do: ensure that designated contributions go into your school's account, that eligible students at your school are verified, and that qualified expenses at your school are paid.

A school's approved eligible-expense plan is its funding goal. Designated contributions apply to that goal first.

If contributions exceed a fully funded budget, additional dollars support a school of the same type with unmet eligible need: public to public, charter to charter, private to private, and only across school types if no like school has unmet need. This is disclosed to donors at contribution and is a default term of the school participation agreement.

We do not hold funds indefinitely. IRC Section 25F requires that at least 90% of contributions received in a given year be spent on qualified expenses for eligible students within that same year. If a school does not want to participate, or cannot use the funds within the required timeframe, those funds move to a school of the same type with unmet eligible need under the same like-for-like model. Funds will not sit unused.

Here is what's settled and what isn't. We continuously monitor the changes and will update our approach and community to keep us all in the know and compliant.

Settled: The credit is enacted law (IRC Section 25F, P.L. 119-21), effective January 1st, 2027. Treasury has issued proposed regulations for Section 25F. Taxpayers, states, and SGOs may rely on these proposed regulations for qualified contributions beginning January 1, 2027. Treasury's June 10, 2026 preview of the guidance framework described:

• A possible safe harbor for the 90% spending test
• A definition of "school" consistent with IRC Section 530
• Rules for SGOs operating across states
• Categorical eligibility for students already documented in needs-based programs, plus a foster-child safe harbor
• A unique IRS-generated donor number on each acknowledgment (no SSN required by the SGO)
• A planned IRS portal for SGO administration

The statutory framework is clear: how states elect to participate, the 90% spending requirement, the segregated-account requirement, the 10-student and no-earmarking rules, the income eligibility standard at 300% area median gross income, and the qualified expense definition under IRC Section 530(b)(3)(A). That framework is what Sunnyside Rising is built to.

Still pending: Final regulations. The current regulations are proposed, and details may change before they are finalized. Sunnyside Rising is reviewing the full regulations and will update this page with any additional detail.