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One-page SCORE report with a blue header titled The Federal Scholarship Tax Credit, explaining Tennessee’s tax credit scholarship program.

The Federal Scholarship Tax Credit: An Opportunity to Support Student Success in Tennessee

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The Federal Scholarship Tax Credit: An Opportunity to Support Student Success in Tennessee

October 1, 2026
One-page SCORE report with a blue header titled The Federal Scholarship Tax Credit, explaining Tennessee’s tax credit scholarship program.

Beginning in 2027, Tennessee will participate in a new program that could create a significant new source of funding for K-12 students and families in a variety of school settings, including traditional public schools, public charter schools, and private schools. The Federal Scholarship Tax Credit will incentivize individual donations to scholarships that eligible students can use for tutoring, instructional materials, special needs services, transportation, and other educational supports.

The Federal Scholarship Tax Credit allows taxpayers to receive a dollar-for-dollar federal tax credit when they contribute to approved nonprofit scholarship granting organizations. These organizations will establish scholarship programs and distribute funds to eligible students for approved educational expenses.

This memo provides:

  • An overview of how the program works
  • Who is eligible to receive a scholarship
  • What expenses scholarships may cover
  • The role scholarship granting organizations will play in administering the program

While the program’s overall framework is established in federal law, implementation decisions will shape its reach and impact in Tennessee. With more than 70% of Tennessee K-12 students estimated to be eligible, the state has an important opportunity to build a student-centered approach that expands access to the educational supports and opportunities students need to succeed.