- Kentucky Secretary Michael Adams signed enrollment paperwork for a new federal education scholarship program.
- The initiative provides 100% tax credits for donations supporting public, private, and home-schooled students.
- Eligible families earning up to 300% median income can access funds starting in tax year 2027.
Kentucky Secretary of State Michael Adams signed the state into a new federal scholarship program on July 22, saying it could expand education support for public, private and home-schooled students.
Adams completed enrollment paperwork with the Internal Revenue Service. The move followed the Kentucky General Assembly’s March 2026 override of Gov. Andy Beshear’s veto of House Bill 1, which authorized the state to join the program.
Free toolOPT Timeline Calculator Online
“This President, Congress, General Assembly and Secretary of State have Kentucky students' backs. All eligible Kentucky students—public, private and home-schooled—will soon have access to better and more affordable education,” Adams said July 22.
The Federal Scholarship Tax Credit, also called the Education Freedom Tax Credit, was created under the One Big Beautiful Bill Act, which became law on July 4, 2025. The credit will apply beginning with tax year 2027.
The program lets taxpayers claim a 100% dollar-for-dollar federal credit for donations to approved Scholarship Granting Organizations. The annual limit is $1,700 for an individual taxpayer and $3,400 for married couples filing jointly.
That money can support more than private-school tuition. Eligible public-school students could use scholarships for tutoring, after-school programs, classroom supplies, computers, internet access, special-needs assistance and transportation to educational providers.
The credit can pay for services outside a school’s regular budget
Scholarships will be available to K-12 students in households earning no more than 300% of the area median income, or AMI. In Kentucky, that income ceiling covers the vast majority of public-school families, according to the program details.
| Qualified expense | Possible student support |
|---|---|
| Academic services | Professional tutoring and after-school programming |
| Learning materials | Textbooks, instructional materials and classroom supplies |
| Technology | Computers, tablets and high-speed internet access for learning |
| Student services | Special-needs services and supports |
| Transportation | Travel to and from educational providers |
The arrangement directs private contributions toward approved organizations rather than sending the money directly through Kentucky’s public-school system. Families would seek assistance through those scholarship organizations once the program begins.
Supporters say the additional funding could ease pressure on districts dealing with declining enrollment. They also point to tutoring and special-education services as areas where outside funding could help schools and families cover high costs.
The Kentucky Department of Education and the Jefferson County Teachers Association have raised a different concern. They argue the program could become a “backdoor voucher” system, even though the money comes through federal tax credits rather than state appropriations.
That dispute centers on where the funds ultimately go. A taxpayer receives a federal credit after contributing to an approved organization, and that organization awards scholarships for qualified education costs. The structure differs from direct state spending, but critics say it could still move public education dollars toward private providers.
Kentucky’s enrollment came before the first eligible tax year
The state’s enrollment now precedes the program’s scheduled start. Adams signed the IRS documentation in July, while the credit itself is set to take effect for tax year 2027.
Registration for scholarship organizations and related enrollment activity began in mid-2026. The timing gives approved organizations a period to establish their operations before families use the benefit.
The income test will apply at the household level. Students must be in K-12 education, and their households must fall at or below 300% of AMI to qualify for scholarships.
A family could use an award for a single qualified expense or combine education services, materials and technology, depending on the scholarship organization’s approval. The listed expenses include both services delivered by providers and items used directly for learning.
The program also reaches students who remain enrolled in public schools. Adams specifically included public-school students in his announcement, and the expense categories include supports that families commonly arrange outside the classroom, such as tutoring, internet access and transportation.
The credit’s federal design separates the tax benefit from Kentucky’s annual budget process. Taxpayers make the qualifying contributions, approved organizations administer scholarships, and eligible families use awards for permitted K-12 expenses.
Adams described the change as a benefit for students across education settings. Kentucky’s next phase will involve the organizations that receive contributions and determine how scholarships cover qualified expenses ahead of tax year 2027.
