The Education Freedom Tax Credit (officially known as the Federal Scholarship Tax Credit, IRC Section 25F) is a new federal program that allows a federal income tax credit for taxpayers who make qualified cash contributions to an eligible 501(c)(3) nonprofit Scholarship Granting Organization (SGO) that provides scholarships to eligible students attending public schools or accredited nonpublic schools for qualifying education-related expenses. The tax credit is subject to applicable federal limitations.
In order for contributions to qualify for the tax credit they must be made to an SGO that is included on the list of SGOs approved to operate in a state that has elected to participate in the program for the year in which the contribution is made.
Iowa has elected to participate in this program for 2027.
Scholarship Granting Organizations
SGOs are eligible 501(c)(3) nonprofit organizations that accept qualified contributions from taxpayers to fund scholarships to eligible students for qualifying education-related expenses. Interested nonprofit organizations must complete Iowa’s state application to participate as a SGO in Iowa.
To qualify as an SGO, an organization must:
- Be recognized as a tax-exempt public charity under IRC Section 501(c)(3); private foundations are not eligible.
- Meet specific federal requirements for awarding scholarships, managing contributions and verifying student eligibility.
- Apply to be included on Iowa’s list of approved SGOs.
Applications to qualify as an SGO in Iowa for 2027 are due by December 31, 2026
To be considered for inclusion on Iowa’s 2027 SGO list, interested organizations must complete the application by 11:59 p.m. on Thursday, December 31, 2026.
Once qualified, SGOs must meet ongoing federal financial, record-keeping, donor acknowledgement, and IRS reporting requirements. After the state has submitted its official list of eligible SGOs to the Internal Revenue Service (IRS), Iowa's finalized list of approved SGOs will be available on the Department’s website.
Qualifying for Iowa’s list in 2027 does not guarantee an SGO will qualify to participate in Iowa for any future year.