A New Federal Tax Credit May Impact Charitable Giving
Kris Kewitsch | Executive Director, Charities Review Council | March 2026
A new federal tax credit will benefit those who direct their philanthropy toward K-12 scholarships starting in 2027. This is the first federal tax credit to incentivize a particular category of charitable giving over others.
The tax credit will provide up to $1,700 to donors who give to scholarship-granting educational organizations (not directly to schools). Individual states will have to opt in to participate, and some states already have similar tax credit options. Much remains unclear on how the law will be applied across the board, and in particular how opting in will work in conjunction (or conflict) with existing programs.
A big question that this tax credit raises is if such a benefit for education scholarships will decrease donor activity to other causes like food security, housing, and youth development. However, because it’s the first federal law of its kind, there’s no national precedent for how it will impact philanthropy at large.
We know that there are many reasons that people engage in charitable giving—most often, people give to causes that are close to their hearts, homes, or families. For some, charitable giving is a tax incentive. For such a lucrative tax credit as $1,700, it’s possible that this new law will shift some people’s giving, even if it’s simply to use the tool to improve tax-efficiency.
Charities Review Council supports policies that encourage charitable giving and strengthen our entire community. In doing so, we value and uphold a vibrant, diverse nonprofit sector that addresses a great variety of local needs. It’s the diversity of this sector that makes it so meaningful.
A new federal law such as this one give us the opportunity to continue a conversation about how to design a philanthropic sector that grows overall giving while maintaining a healthy, balanced, and supported charitable ecosystem.
