NASHVILLE, Tenn. — The Tennessee Department of Education has opened a preliminary interest form for Scholarship Granting Organizations as the state advances participation in the federal education tax credit program.
Tennessee is one of 30 states that have made an advanced election to participate so far. Federal temporary regulations released last week set requirements for state elections and for groups certified as Scholarship Granting Organizations.
Those nonprofits accept contributions from individuals and use the money for scholarships covering education-related expenses. They must use at least 90 percent of their income on scholarships that support education choice options, including tuition, fees, academic tutoring and classroom supplies for eligible K-12 students.
Beginning Jan. 1, 2027, individual taxpayers may claim a Federal Scholarship Tax Credit for certain cash contributions of up to $1,700 to approved Scholarship Granting Organizations, under Internal Revenue Code Section 25F. A state must choose to participate and provide a list of SGOs in that state to the IRS before donors can claim the credit.
Education Commissioner Lizzette Reynolds called the form the first step in expanding educational opportunities for Tennessee families. Gov. Bill Lee said the state is proud to participate in the federal Education Freedom Tax Credit program and credited President Trump and Education Secretary McMahon for school-choice leadership.
Groups that want to form a nonprofit Scholarship Granting Organization are directed to the Tennessee Secretary of State and the IRS for 501(c)(3) questions. More detail on eligible scholarship expenses is expected later this fall from the U.S. Department of the Treasury. Interested organizations can complete the preliminary interest form and send questions to the education department.