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.
Frequently Asked Questions About the Federal Scholarship Tax Credit
It is a new federal program created by the One Big Beautiful Bill Act. Taxpayers who donate to Scholarship Granting Organizations get a federal tax credit, and those organizations fund K through 12 scholarships for eligible families.
The program takes effect January 1, 2027.
Individuals can receive a dollar-for-dollar federal tax credit for donations of up to $1,700. Married couples filing jointly can receive up to $3,400, with up to $1,700 individual donation receipts from each spouse.
It’s a credit. Your federal income tax bill goes down by the full amount you donate, up to the limit. The donation is not refundable, but any unused credit can be carried forward for 5 years.
Donors designate their gift as a qualified contribution. By January 31 of the following year, the SGO sends them a statement with a unique donor number to use on their federal return.
Children from families earning up to 300% of the area median income in their region. In Nevada, about 89% of K-12 students qualify, which is more than 480,000 kids.
Qualified educational expenses include private school tuition, tutoring, books and materials, and more. Families could also use scholarships for wraparound services or for transportation to a charter school. More detailed specifics can depend on the SGO that the family is using to access the funds.
$1700 is not the cap of the scholarship award, but of the individual donation. The SGO will determine the award size for each student based on their need.
An SGO is a non-profit organization that collects Federal Scholarship Tax Credit donations and turns them into scholarships for children. Qualified SGOs must:
– verify family eligibility according to the federal law
– keep tax credit donations in a separate account
– spend 90% of its income on scholarships
– keep records through the IRS SGO Portal
Yes. The governor has already opted into the program. Next, he must file an election with the IRS by January 1, 2027 and submit a list of qualified SGOs, due February 15, 2027 for the first year and January 1 in later years.
No. States cannot impose requirements stricter than the federal rules. SGOs can choose to narrow their own focus, for example by serving only high schoolers or only families with lower income than the threshold.
The Opportunity Scholarship is Nevada’s only private choice program, and it serves fewer than 1,600 students. The Federal Scholarship Tax Credit could reach the more than 480,000 Nevada students who meet its eligibility criteria.
