Treasury’s New Rules Open the Door to School Choice in the Silver State
Starting January 1st, Nevada’s educational outcomes can improve, one donation at a time.
On October 1st, 2026, U.S. Department of Treasury released its set of regulations and guidelines for the newly established Federal Scholarship Tax Credit (FSTC), also known as the Education Freedom Tax Credit. The program is set to take effect on January 1st, 2027, enhancing the educational choice options of the Silver State families.
What Is the Federal Scholarship Tax Credit?
Created by the passage of the One Big Beautiful Bill Act, the Federal Scholarship Tax Credit (FSTC) will provide scholarships to qualifying families from the states that have opted in, to be used for educational expenses such as tuition, tutoring, books and materials, and more.
How the $1,700 Federal Tax Credit Works
The design is simple. Any individual taxpayer can receive a dollar-for-dollar tax credit towards their federal income tax for a donation to a qualified Scholarship Granting Organization (SGO) of to $1,700. Married couples filing jointly can receive tax credits of up to $3,400, with up to $1,700 individual donations each.
The SGOs then, will use these funds to provide scholarships to children from families making up to 300% of the area median income in their region.
A historic first in federal policy, the FSTC will allow the education dollars to follow the child, not the school. In practice, this means that parents who are unsatisfied with the outcomes or the support services of their child’s current school will have the funds to pick an option that serves their child better.
Donors Can Give From Any State
Importantly, donations are not confined to the state. This means that donors can donate to Nevada-only SGOs or multi-state SGOs. A study estimates that there are more than 121 million eligible donors nationwide – if only 5% of them were to donate, the program would raise $9.4 billion.
Nearly 9 in 10 Nevada Students Qualify
In Nevada, around 89% of the entire K-12 student population will meet the eligibility criteria. That is over 480,000 students. Reaching these children will require several actors working together.
Step One: Nevada Must Submit Its SGOs
First, Nevada will be required to submit a list of qualified SGOs to the federal government. The governor must file an election with the IRS, by January 1, 2027 and submit a list of qualified SGOs, due February 15, 2027 for this year and January 1st in later years.
Step Two: SGOs Verify Families and Award Scholarships
Second, qualifying SGOs will be required to verify eligibility of families, keep FSTC donations in a separate account, spend 90% of all the donations towards scholarships, and conduct recordkeeping through the IRS SGO Portal.
Crucially, states will not be able to impose requirements on the SGOs stricter than the federal rules, but an SGO itself can choose to narrow its own focus. This means that SGO operations will not be affected by political winds of favorability in the state legislature (especially, in the purple Silver State). Instead they will be rooted in local communities they serve.
For instance, an SGO might choose to limit its scholarships to qualified expenses for high schoolers only, in subject areas like science or foreign languages, or to families whose income is less than 100% of the area median income. There is no federal limitation on the monetary scholarship amount for each student, allowing SGOs to decide what fits the needs of their applicants best.
Step Three: Donors Give and Claim Their Credit
Finally, the donors give to an SGO and designate their funds as a qualified contribution. The SGO sends each donor a statement with a unique donor number by January 31, of the following year for the donor to claim the credit on their federal return.
Why the Federal Scholarship Tax Credit Matters for Nevada
The federal tax credit marks a unique momentum of an effort to ensure that education decisions are made by parents, not by zoning maps or zip codes.
Nevada parents already have the option to choose educational alternatives within the public education. Through policies like open enrollment, students can attend a public school other than the one they are zoned for within their district.
However, the state’s only private choice program, the Opportunity Scholarship, serves less than 1,600 kids. That’s roughly 0.3% of the K through 12 population.
That makes the FSTC is a groundbreaking opportunity for parents who to leave the public education system, purchase more wraparound services like tutoring, or pay for transportation to their child’s charter school.
Because the categories for the uses and the scholarship amounts can vary broadly, each parent can customize the scholarship to their child’s needs.
Every Nevada Taxpayer Can Help Starting January 1
Only a fraction of Nevada families have experienced school choice, but hundreds of thousands of families in other states already know it works. The Federal Scholarship Tax Credit lets Nevadans choose the school that’s best for their kids. Starting January 1, every taxpayer will have the chance to give Nevada families real choice and their children a school that fits.
Nevada Policy is Here to Help You
We know you have questions. Nevada Policy will be here every step of the way as a resource for parents, potential donors and schools, sharing updates and helping your family make the most of this opportunity. Our Federal Scholarship Tax Credit Toolkit is updated regularly as new information comes available.
