The Colorado Department of Revenue opened applications on October 18, 2026, for eligible nonprofits seeking a place on Colorado’s list for the Federal Scholarship Tax Credit. The federal program takes effect January 1, 2027.
The application is for qualifying scholarship granting organizations, or SGOs. Taxpayers may claim a non-refundable federal credit for donations to approved organizations, up to $1,700 per individual.
Gov. Jared Polis urged eligible nonprofits to apply, saying donors could help expand educational opportunities for children. He described investment in students as support for Colorado’s future workforce and economy.
“Colorado donors value our future, and I'm excited that donors will now be able to give more to support the best education possible for kids in our state.”
Colorado will review applications as groups prepare for the federal credit
The department updated its application form for the state’s eligibility list. It will review submissions as they arrive, and nonprofits awaiting IRS certification of their 501(c)(3) status may still apply.
| Group | What the proposed program provides |
|---|---|
| Individual taxpayers | An annual credit of up to $1,700 for qualifying contributions |
| Married couples filing jointly | An annual credit of up to $3,400 |
| School-aged students | Eligibility for families with income up to 300% of area median income, a threshold estimated to cover about 95% of children nationwide |
Treasury proposed federal rules on September 30, 2026. Those rules outline what scholarship organizations can fund and how they may select recipients. Colorado plans to send its approved list to Treasury by December 31.
The proposed framework makes SGOs, rather than states, responsible for selecting scholarship recipients and distributing funds. It also bars states from setting their own standards for locally operating SGOs and the scholarships they offer. Donors cannot reserve gifts for a particular student.
Treasury’s proposal sets credit limits and scholarship rules
The credit can cover qualifying elementary and secondary education expenses, including tutoring, special-needs services, books, supplies, computers and other equipment. Scholarships may also be used for private-school tuition. Unused credits can carry forward for up to five years.
SGOs may limit awards by subject, such as science or foreign languages, or set an income condition, such as household earnings below 80% of area median income. The rules also allow streamlined eligibility for families enrolled in SNAP, TANF, WIC, Section 8 housing or SSI, as well as foster children and some students receiving tutoring or special-needs services in low-income areas.
Organizations will not have to collect donors’ Social Security numbers. They must establish reporting, verification and audit procedures intended to prevent duplicate awards and reduce fraud and abuse.
The program, also called the Education Freedom Tax Credit, was enacted by Congress as part of last year’s One Big Beautiful Bill Act. In October, Polis welcomed Treasury’s clarification that public-school students could qualify.
“I am glad that today's rules clarify that these donations can support public school students and I look forward to providing further comments on these draft rules. I encourage Colorado non-profit organizations to get ready to sign up, and for Coloradans to donate using this tax credit once available next year,” Polis said.
Public-school organizations are building a path into the program
The governor’s office named the Colorado Public Schools Foundation, Denver Public Schools Foundation Opportunity Fund and Learn Everywhere Fund as organizations that would give taxpayers ways to support public-school students. The Colorado Public Schools Foundation, Denver Public Schools Foundation and RESCHOOL are also creating separate nonprofit entities to operate as SGOs.
RESCHOOL has distributed “learning dollars” for more than a decade. The awards have paid for services including math tutoring and swim lessons.
About 20 of Colorado’s more than 170 school districts have foundations, said Shannon Hancock, chair of the Colorado Public Schools Foundation and executive director of the Five Star Education Foundation, which benefits the Adams 12 Five Star district. Hancock said districts could sign agreements with the statewide organization so taxpayers could direct donations to a particular district.
“You can stand on principle and say, 'We're not going to do this because this is a voucher scheme,' but then who benefits?”
Hancock said public-school groups are considering how to use the program. Antonio Parés, a former teacher and consultant helping those groups, raised after-school tutoring, Advanced Placement test fees and fifth-day programming as possible uses in more than 130 districts that operate on four-day school weeks. Most are small and rural.
Parés said the initial guidance does not spell out every possible use, but those examples appear to qualify. He said public education has more potential donors than private education, describing the program as “way better for public ed” from a numbers perspective. He also said groups want to show the next governor that the program benefits public schools.
Colorado’s participation is already drawing political and policy objections
Critics argue the program could shift public resources toward private schools rather than focus on students with the greatest needs. Eric Duncan, director of K-12 policy with EdTrust, said the rules give SGOs broad discretion.
“The way that the regulations are drawn, pretty much any student is eligible. It isn't targeting the most vulnerable students,” Duncan said.
Colorado voters have rejected at least three attempts to establish voucher programs. During the most recent legislative session, Democrats tried to pass requirements for equal access to program funds for public-school organizations, along with nondiscrimination and disability protections for participating schools. The legislation failed.
Polis, a Democrat, registered Colorado with the federal government in January 2026 by submitting an Advance Election to Participate form to the IRS. Colorado was the only consistently progressive state to opt in, according to the material describing state participation. The next governor must renew the state’s participation in 2028 for it to continue.
Democratic gubernatorial nominee Phil Weiser has called himself a “firm no” on the program and said people who call it benign are “naive or misleading people.” A campaign spokesperson said Weiser is still reviewing the rules. Republican candidate Victor Marx supports the program.
Madi Ashour, director of K-12 education policy at the Colorado Children’s Campaign, said the federal rules contain no process for a new governor to withdraw Colorado immediately. That leaves the state committed for at least a year, she said.
U.S. Education Secretary Linda McMahon called the initiative “the first federal school choice program.” The Trump administration expects more than 11 million taxpayers could contribute $26 billion each year, with up to 5 million students receiving funds.
The department is accepting applications through November 30.
