The Federal Scholarship Tax Credit in California
Last updated: October 2026. California has not opted in.
Where things stand
California has not opted in to the Federal Scholarship Tax Credit. Governor Gavin Newsom has taken no public position on whether the state will participate.
No opt-in bill advanced during the 2025-26 legislative session. The only legislative vehicle was ACR 229, a non-binding resolution urging Newsom to opt in by executive action. It did not require a vote or carry legal force.
Federal lawmakers have applied pressure. Representative Vince Fong wrote to Newsom in January 2026 urging action. Representative Kevin Kiley has urged Newsom to act before leaving office in January 2027.
Why California matters
About 6 million California children would be eligible for federal scholarships, more than any other state. A poll found 59% of California voters favor opting in, with support at 76% among Black voters and 68% among Latino voters.
Students at St. Genevieve schools ran a "Purple Postcard" campaign in early 2026, sending 15,000 postcards to Newsom urging him to opt in.
What this means for California families
If California does not opt in by January 1, 2027, California students cannot receive federal scholarships. California donors could still give to scholarship organizations in participating states and claim the federal credit, but the money would fund students in those states. The election is annual, so a future governor could join for 2028.
What California has now
California has no vouchers, no education savings accounts, and no tax-credit scholarship program. Voters rejected school choice ballot measures twice: Proposition 174 in 1993 (69.6% voted no) and Proposition 38 in 2000 (70.5% voted no).
What California does have is the largest charter school sector in the country, with more than 700,000 students. The state also has a District of Choice program (fewer than 50 of roughly 1,000 districts participate) and interdistrict transfer options.
Federal scholarships could supplement what public and charter school students already receive, covering tutoring, books, technology, and special education services.
Income limits if California joins
Students would qualify if household income is at or below 300% of the area median income. Based on HUD data, here is what that looks like across California:
| County | Max household income (300% of area median) |
|---|---|
| Los Angeles | $324,300/year |
| San Diego | $392,700/year |
| Orange | $415,800/year |
| Riverside | $319,500/year |
| San Bernardino | $319,500/year |
| Santa Clara | $616,500/year |
| Alameda | $488,400/year |
| Sacramento | $372,000/year |
| Fresno | $273,900/year |
| San Francisco | $602,400/year |
Estimates based on 2026 HUD income data. The IRS has not published official 2027 figures, and the income calculation method comes from proposed federal regulations, not final rules.
Organizations in California
No California-based organization has announced plans to serve as a federal SGO. The BASIC Fund in San Francisco is the most cited existing scholarship nonprofit in the state, and its CEO supports opting in, but no announcement about federal SGO registration has been made.
If California opts in, its SGO list would be due to the IRS by February 15, 2027. No state agency has been designated to certify SGOs.
California tax note
California does not conform to the federal scholarship tax credit for state tax purposes. There is no state credit to offset against the federal credit. The state tax treatment of the donation itself has not been clarified.
The governor's race
Newsom leaves office in January 2027. The 2026 governor's race could change the calculus. A new governor could opt in for 2028 even if California sits out 2027, since the federal election is annual.
Key dates
| Date | Milestone |
|---|---|
| June 2026 | ACR 229 introduced (non-binding, urging opt-in) |
| October 1, 2026 | Treasury releases implementing regulations; no Newsom response |
| November 3, 2026 | California gubernatorial election |
| January 2027 | New governor takes office |
| January 1, 2027 | Deadline for California to opt in; program goes live |
| February 15, 2027 | SGO list due to IRS (if CA opts in) |
Sources
- IRS: Federal Scholarship Tax Credit, participating states list (accessed October 2026)
- The 74: Scholarship tax credit leaves Democratic governors with a difficult choice (accessed October 2026)
- Democrats for Education Reform: California poll on FSTC opt-in (59% favor) (accessed October 2026)
- PR Newswire: St. Genevieve Purple Postcard Campaign (February 11, 2026) (accessed October 2026)
- EFTC: ACR 229 urges Newsom to opt in (June 23, 2026) (accessed October 2026)
- Tax Notes: Rep. Vince Fong letter to Newsom (January 28, 2026) (accessed October 2026)
- Ballotpedia: state participation in the federal K-12 education tax credit program (accessed October 2026)
- American Federation for Children: state-by-state eligible population report (5.9M CA) (accessed October 2026)
- Treasury/IRS Section 25F regulations (October 1, 2026) (accessed October 2026)