Indianapolis, Indiana – For Indiana families trying to keep up with the rising costs of education, help could soon come from an unexpected place: a new federal tax incentive designed to bring more private donations into student scholarship programs.
The opportunity does not officially begin until 2027. But Indiana Governor Mike Braun is already pushing organizations across the state to prepare, hoping to turn the new federal benefit into additional financial support for Hoosier students.
Braun is encouraging existing and prospective Scholarship Granting Organizations (SGOs) to apply for state approval ahead of the program’s launch. The initiative will allow taxpayers who contribute to approved organizations to claim federal tax credits while helping fund educational scholarships for eligible students.
Beginning January 1, 2027, individual taxpayers will be eligible for a nonrefundable federal tax credit of up to $1,700 for donations to approved Indiana SGOs. Married couples filing jointly may qualify for credits totaling up to $3,400.
The federal benefit will be available to donors regardless of whether they live in Indiana. It will also operate alongside existing state tax incentives, potentially making contributions more attractive to individuals interested in supporting educational opportunities.
Taxpayers who cannot use the entire federal credit in a given year will be permitted to carry the unused portion forward for up to five years.
The financial incentive is intended to encourage charitable giving to organizations that distribute scholarship funds to qualifying students.
Those scholarships can help families pay for a broad range of educational expenses. Eligible costs include tuition, school fees, textbooks, classroom supplies, tutoring, technology, special education services, and before- and after-school programs.
Importantly, the assistance is not limited to children attending private schools. Eligible students enrolled in public schools may also receive support for qualifying expenses.
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For Braun, the program fits into his administration’s broader emphasis on giving parents greater control over their children’s education.
“In Indiana, we want every parent to be able to choose the best education for their child, and cost shouldn’t stand in the way of giving them that opportunity,” said Gov. Braun.
“This new federal tax credit will help bring more scholarship dollars to Indiana, making educational expenses like tuition, books, and supplies more affordable for Hoosier families, empowering them to pursue the best education for their child’s unique needs.”
Indiana officials have already begun preparing the administrative framework needed to participate.
On October 1, the U.S. Department of the Treasury and the Internal Revenue Service released proposed regulations explaining how states should implement the new federal education tax credit.
Following that announcement, Indiana developed and launched its application process for organizations seeking approval for the 2027 program year.
The application is now available through the Indiana Department of Education, allowing qualified organizations to begin preparing before the federal benefit becomes available.
The department will publish an official list of approved SGOs by December 31 each year, identifying organizations eligible to receive qualifying contributions during the following calendar year.
Indiana Secretary of Education Dr. Katie Jenner also emphasized the potential benefits for students whose families need additional assistance.
“Every child deserves the opportunity to reach their full potential, and every family deserves the freedom to find the educational environment where their child can thrive,” Jenner said.
She highlighted how expanded scholarship funding could improve access to tutoring, technology, and programs that support learning beyond regular classroom hours.
With the first federal tax credits scheduled to become available in 2027, Indiana’s immediate priority is getting scholarship organizations approved and ready to participate.
The coming months will determine which organizations qualify, while the program’s longer-term impact will depend on how many donors contribute and how effectively those contributions reach eligible students.
