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Federal Scholarship Tax Credit (FSTC) Program Approved!

On July 4, President Trump signed “The One Big Beautiful Bill.” One aspect of this bill includes a Federal Scholarship Tax Credit (FSTC) program that is modeled after successful state tax credit scholarship programs throughout our country, including Indiana. This program is a part of a modified version of the Educational Choice for Children Act (ECCA.)

Federal Scholarship Tax Credit (FSTC) Program Key Points

    • The bill allows for a 100% Federal Tax Credit for donations from individuals to Scholarship Granting Organizations, just like our Lutheran SGO.
    • There is a $1,700 maximum Federal Tax Credit per taxpayer per year.
    • Donors can designate their gift to be used for scholarships at the school of their choice.
    • Donations can come from individuals in any state, but SGOs can only provide scholarships in their state.  Businesses are not allowed to claim this credit.
    • There is no sunset date on this legislation. It is permanent.
    • There is no aggregate tax cap. The $1,700 maximum Federal Tax Credit is available to every taxpayer in our country.
    • There is a five-year rollover on this tax credit.
    • Scholarship recipients must come from families earning under 300% of the Median Local Income.

Gov. Braun has officially opted-in to allow schools in Indiana to participate in the program, and our Lutheran SGO has been recognized as an approved SGO to manage the FSTC!   

The FSTC program begins on January 1, 2027.

While a $1,700 maximum Federal Tax Credit is not nearly as significant as the State Tax Credit allowed in Indiana, the fact that the $1,700 is a 100% Federal Tax Credit provides a great incentive to donate. If Hoosiers continue to contribute to our Lutheran SGO taking advantage of the 50% State Tax Credit, and then also contribute taking advantage of the 100% Federal Tax Credit, we can truly maximize our financial support for our Family of Schools. Imagine the impact that this will have on our students attending our schools!

Please know that our Lutheran SGO will be ready to manage this program when it goes live on January 1, 2027. Much more information will be shared as it becomes available.