Five Questions Families Ask About Catholic School Scholarships and the New Tax Credit

The new federal scholarship program has two distinct sides: donors contribute to eligible SGOs and may claim a tax credit; families apply for scholarships for qualified educational expenses. Understanding that difference helps Catholic school staff answer questions without promising benefits the program does not guarantee.

1. Is this a tax credit for paying my child’s tuition?

No. Section 25F provides a credit for qualifying cash contributions to a scholarship granting organization. It is not a general credit for paying tuition directly to a Catholic school.

A family seeking help with tuition would use the scholarship application process offered by the administering SGO. If a parent also chooses to donate, the contribution and scholarship application must remain separate. An SGO cannot earmark a contribution for a particular student.

2. Who may be eligible for a scholarship?

The federal law defines an eligible student using household income and public-school enrollment eligibility. The income threshold is no more than 300% of the applicable area median gross income, with household size and the relevant geographic figures affecting the calculation. A student must also be eligible to enroll in public elementary or secondary school.

This is not one national dollar cutoff. Families should wait for the administering program’s eligibility instructions and submit the required information for review. The SGO must verify household income and family size.

Federal eligibility is also different from receiving an award. Funding, program scope, application completeness, and applicable priorities affect actual scholarships. The statute gives priority to previous scholarship recipients and then eligible siblings under its rules.

3. Can the scholarship help pay Catholic school tuition?

Tuition can fall within qualified elementary and secondary educational expenses under the federal framework. The statute references section 530(b)(3)(A), which also covers other categories of educational expenses under specified conditions.

That does not mean every purchase for a student qualifies or that every school offers the same scholarship options. Treasury’s October 1 proposal discusses expense verification and qualified digital wallets. It also notes that further guidance on schools and qualified expenses is intended. Ask the administrator what costs its program will cover before making commitments.

4. Does a donation guarantee my child a scholarship?

No. Contributions cannot be set aside for a named student. A school preference, where permitted by the program, is different from selecting a scholarship recipient.

Families should be especially careful about offers implying that a parent can donate an amount, receive a tax credit, and recover that amount as their child’s guaranteed scholarship. That is not the structure described in the federal rules.

A student’s application should be evaluated through the administering SGO’s eligibility and award process, separately from any donor relationship.

5. When and where should we apply?

The federal credit begins in 2027, but application opening dates and award schedules depend on the specific scholarship program and its readiness. January 1 does not automatically mean every school’s scholarship application is open or that funds have already been awarded.

Ask your Catholic school which SGO pathway it expects to use, whether state and recipient eligibility are confirmed, and where application announcements will appear. Prepare household information, but do not send sensitive tax documents through an informal email or an unverified link.

What can families do today?

Continue using your school’s existing financial-aid process while learning about the new opportunity. Keep school deadlines on your calendar and ask staff to distinguish current aid from future federal-program scholarships.

Explore CEF’s information for families and subscribe for updates. Donors who want to understand the contribution side can read our plain-language donor guide.

Sources and guidance status

Reviewed October 1, 2026. Sources: Treasury and IRS proposed regulations, REG-117199-25 (advance publication PDF supplied to CEF; scheduled publication October 2, 2026), including the statutory background and explanation of provisions.

Proposed provisions are identified as proposed; actual giving and scholarship participation require verification of the applicable rules and recipient eligibility. Tax outcomes depend on individual circumstances.