How Tax Credit Scholarship Programs Work
Tax credit scholarship programs allow eligible tax dollars to be redirected into student scholarship funding rather than paid entirely to the government. RedefinED coordinates every step of that process — for donors, schools, and SGOs — so participation is simple, compliant, and impactful.
1. Tax credit programs are established by state or federal policy
State legislatures and, through the Federal Scholarship Tax Credit (FSTC), the federal government authorize programs that allow eligible taxpayers to redirect a portion of their tax liability into approved scholarship funds.
2. Donors contribute their eligible tax liability to approved programs
Individuals, businesses, and organizations with qualifying tax liability participate by directing a contribution to an approved Scholarship Granting Organization. In many cases, this results in little to no additional out-of-pocket cost.
3. SGOs distribute scholarships to qualifying students and schools
Scholarship Granting Organizations receive the contributions and award scholarships to eligible students, directing funding to participating schools on their behalf.
4. Students receive scholarships that expand their educational options
The result is direct, meaningful support for K-12 students and families — funding that increases access to quality education regardless of a family’s financial situation.