Nevada is now one of 27 states that have signed up for the new Federal Scholarship Tax Credit, the IRS announced June 8. The credit was created by the 2025 reconciliation law known as the One, Big, Beautiful Bill, and it gives individual donors a dollar-for-dollar federal credit for contributions to organizations that fund K-12 scholarships.
What the credit does
Starting with the 2027 tax year, an individual taxpayer can claim a nonrefundable federal credit of up to $1,700 a year for cash contributions to a qualified Scholarship Granting Organization, or SGO. The credit is worth 100% of the contribution up to that cap, regardless of filing status. An SGO is a nonprofit that awards scholarships for qualified elementary and secondary education expenses.
Because the credit is nonrefundable, it can reduce a federal tax bill but will not pay out as a refund if it exceeds what a taxpayer owes. Any unused amount generally carries forward for up to five years. The Joint Committee on Taxation has estimated the program will cost about $25.9 billion over ten years.
Why state participation matters
The credit only works where a state has opted in. States elect to participate and then give the IRS a list of the SGOs that qualify within their borders. A contribution counts only if it goes to an SGO on a participating state’s list, which is why the state-by-state sign-up matters for donors deciding where and how to give.
As of the June announcement, the 27 participating states were Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming. The IRS has said it will keep the official list current as more states complete the election process.
What Nevada donors should do now
There is no rush to write a check. The credit does not apply to contributions until the 2027 tax year, and Nevada’s list of qualifying SGOs has to be in place first. The useful move this year is to understand the rules: the $1,700 per-taxpayer cap, the nonrefundable structure, the five-year carryforward, and the requirement that the recipient be a qualified SGO in a participating state. Donors who already give to education causes will want to check whether redirecting a gift to a qualified SGO turns a deduction-only contribution into a dollar-for-dollar credit.
BCA helps individuals and business owners read new provisions like this one against their own situation, so a charitable plan lines up with the credit rules rather than missing them. We bring business and compliance experience to the planning conversation and coordinate with a trusted tax advisor when it is time to put numbers on a return.
Sources
- IRS, “More than half the U.S. States signed up to participate in the federal scholarship tax credit program enacted under the One, Big, Beautiful Bill” (IR-2026-76). https://www.irs.gov/newsroom/more-than-half-the-us-states-signed-up-to-participate-in-the-federal-scholarship-tax-credit-program-enacted-under-the-one-big-beautiful-bill
- IRS, “One, Big, Beautiful Bill provisions.” https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
- Congressional Research Service, “Federal Tax Credit Scholarship Program Included in P.L. 119-21” (R48724). https://www.congress.gov/crs-product/R48724
- Bipartisan Policy Center, “The New Scholarship Tax Credit” (explainer).
This information is provided for general educational purposes and reflects opinions based on experience. It is not licensed legal, tax, or financial advice. Program rules depend on forthcoming IRS guidance and each state’s election and SGO list. We refer to and partner with licensed professionals when personalized advice is needed. Laws change, and we make no warranty of accuracy or timeliness.