Federal Scholarship Tax Credit (FSTC) Program
South Dakota Partners in Education is dedicated to expanding educational opportunity and supporting academic success for all K-12 students across South Dakota. Our focus is on empowering families and ensuring every student has access to the learning environment that best meets their needs. We appreciate your interest in advancing educational access and thank you for your commitment to this important work.
FAQs
What is the Federal Scholarship Tax Credit (FSTC) Program?
This new FSTC program enables individual taxpayers to support K-12 educational opportunities by making donations to nonprofit Scholarship Granting Organizations (SGOs) like SDPE. These contributions help SDPE award scholarships to eligible students, empowering families with broader school-choice options and supporting academic achievement.
How the Program Is Funded & What the Scholarships Can Cover
Eligible taxpayers may contribute to a qualified Scholarship Granting Organization (SGO), such as South Dakota Partners in Education (SDPE) – and receive a dollar-for-dollar federal tax credit toward their annual federal income tax in that calendar year. Current federal guidance allows an individual to claim up to $1,700 in credits annually.
SGOs then use these donated funds to award scholarships to eligible K-12 students. Under the new federal law, most students enrolled in various educational programs may qualify. Qualifying education programs include public, private, microschools, or homeschools. Scholarships may be applied toward a broad range of allowable educational expenses, extending far beyond traditional tuition.
- Tuition at a participating private school
- Enrollment and registration fees
- Required school fees, including lab fees, some activity fees, and materials
- Books, textbooks, and instructional supplies
- Educational materials needed for coursework
- Computer hardware and software used primarily for education
- Internet access needed for schoolwork
- Transportation costs to and from school
- Tutoring and academic support services, including special-needs services
- Uniforms or required school attire
- School-provided room and board, where required for enrollment
- Supplementary items and services the school requires or provides for attendance (including extended-day or after-school academic programs). This does not include preschool.
In short, although tuition scholarships remain central, the new FSTC program allows SGOs like SDPE to support a much broader set of education-related expenses — making the program more flexible, inclusive, and valuable for families.
When can South Dakota Partners in Education (SDPE) begin accepting Federal Tax Credit payments?
Please note that South Dakota Partners in Education (SDPE) is not permitted to accept any Federal Tax Credit payments until January 1, 2027, in accordance with the federal implementation timeline.
How does a student qualify for a scholarship?
Students who live in South Dakota and whose household income is up to 300 % of the area’s median income are eligible to receive scholarships from the Federal Scholarship Tax Credit (FSTC) Program through SDPE. How eligibility will be documented has not been announced. However, eligibility criteria ensure that families with demonstrated financial need and a desire for educational opportunities can benefit from the program.
When does the program start?
The Federal Scholarship Tax Credit (FSTC) Program is scheduled to begin on January 1, 2027, at which time donations made to SDPE under this federal tax-credit mechanism will become available.
When can I apply for a federal tax credit scholarship for my child?
Please bookmark this page and check back regularly for additional details about applying for a scholarship through SDPE under the Federal Scholarship Tax Credit (FSTC) Program. We will publish the application timeline, eligibility documentation requirements, and any state-specific procedures as soon as they are confirmed.