Education Freedom Tax Credit Calculator (2027)

TY2027 authority. IRC §25F was enacted by OBBBA §70411, P.L. 119-21, 139 Stat. 215–218. The amendments apply to tax years ending after December 31, 2026. This estimate covers qualified cash contributions made personally in 2027 by a U.S. citizen or resident. The IRS FSTC page (updated October 23, 2026) describes Form 8525, SGO and donor numbers, and the $1,700 individual / $3,400 joint maximum. The Treasury release of October 1, 2026 describes the proposed and companion temporary regulations. The proposed regulations, §1.25F-2(c)(1), clarify the State-credit ordering rule; the release permits reliance for qualified contributions beginning January 1, 2027.

State reduction before each cap. For each taxpayer, effective contributions = max(0, qualified contributions − attributable State credit). Federal credit before the liability limit = min(effective contributions, $1,700). For MFJ, calculate each spouse separately and add the two capped credits. State credits never transfer between spouses. A $2,500 qualified contribution and $500 State credit therefore produce $1,700 before the liability limit. For the displayed breakdown, CREDIT BEFORE LIMITS is the total qualified contributions entered, STATE CREDIT REDUCTION is the reduction actually applied (not exceeding each person’s contributions), and PER-TAXPAYER CAP EXCLUSION is the remaining amount above the separate caps.

Liability and five-year FIFO carryforward. Used this year = min(credit after State reductions and caps, available federal income tax liability). Carryforward = that credit minus current use. The liability input is a proxy for the §26(a) limit after other subpart-A credits, except §23 and §25D; use the liability available for this credit, not withholding or a refund balance. Section 25F(f) allows unused credit for up to five succeeding tax years, first in, first out. Only the unused credit originating in 2027 is estimated here; no prior-year balances or future-year use are calculated. Excess contributions above the caps are excluded from credit and do not carry forward as credit.

Eligibility and documentation. The taxpayer must be a U.S. citizen or resident during the period of the qualified contributions. There is no donor income limit or state-residency requirement. Confirm the SGO is on the applicable IRS list, then confirm the Section 25F contribution designation and donor acknowledgment. The two confirmations are tested in that order. Keep the acknowledgment and the information required for Form 8525, including the SGO and donor number. No identification numbers are collected here. The §170 no-double-benefit rule and the SGO/student requirements below are context only.

Scope and protected inputs. Not modeled: multi-year FIFO tracking, prior-year credit balances, full §26(a) computation and other-credit coordination, AMT interactions, State program calculations, allocation between qualified and nonqualified portions of a gift, §170/itemized-deduction interactions, and student or SGO qualification. State and SGO lists evolve and are not hardcoded. Complete thousands-comma groups are accepted; invalid or empty drafts retain the last valid value. Negative amounts become zero, amounts are capped at $10,000,000, and cents round half-up. All credit arithmetic uses integer cents. Hidden spouse inputs are excluded outside MFJ. Reset restores C01 and clears invalid drafts; Copy link includes all eight current valid inputs.