K-12 · Paying for Tutoring · 2026-27
Can You Use School Choice Money for Tutoring? Federal Tax Credit Scholarships and State ESAs, State by State
A new federal scholarship starts in January 2027 and names academic tutoring as a qualified expense. Here is which states are in, what each state’s ESA covers, and whether SAT and ACT prep counts.
Jeremy M. Fine
A free ConnectPrep resource. Facts verified against official sources on the date shown.
The short answer
Yes, in many states. The new federal tax credit scholarship, which starts January 1, 2027, lists academic tutoring as a qualified expense and covers public school students, but only in participating states: 30 as of mid September 2026. Separately, at least 12 state education savings account programs, including Texas, Florida and Arizona, already pay for tutoring. Test prep is murkier: Arizona, Alabama and Oklahoma explicitly cover exam prep courses, while the federal rules have not yet said whether test prep or exam fees qualify.
Jan 1, 2027
federal tax credit scholarships begin
30
states on the IRS participation list
$1,700
federal credit per donor per year
96%
of kids in participating states are income eligible, per Treasury
The federal tax credit scholarship, explained
Quick answer
Section 25F of the tax code, created by the One Big Beautiful Bill Act, gives taxpayers a dollar for dollar federal credit of up to $1,700 a year ($3,400 for married couples) for donations to scholarship granting organizations. Those organizations fund K-12 scholarships for students in states that opt in. Contributions qualify starting January 1, 2027.
The IRS calls it the Federal Scholarship Tax Credit, Treasury’s October 2026 announcement calls it the Education Freedom Tax Credit, and advocates often say ECCA. All three names describe the same program. Treasury released proposed regulations on October 1, 2026 and published them in the Federal Register on October 2.
Who qualifies: a student whose household income is no more than 300% of the area median gross income and who is eligible to enroll in a public elementary or secondary school. That second test is important. It means a student does not need to attend, or plan to attend, a private school. Treasury estimates about 96% of children in participating states meet the income test, and projects up to 2.2 million scholarships a year by 2030.
Scholarship granting organizations must be 501(c)(3) charities, spend at least 90% of their income on scholarships, serve at least 10 students at different schools, verify family income and never earmark a donation for a specific child. Donors anywhere in the country can give to an organization in a participating state.
Does it pay for tutoring and test prep?
Quick answer
Tutoring, yes. The statute adopts the expense list in Section 530(b)(3)(A), which names academic tutoring. Test prep and SAT, ACT or AP exam fees are not named, and Treasury says expense guidance will be issued separately, so whether they qualify is still an open question as of October 2026.
The statute’s own words. Section 25F defines a qualified expense as any expense described in Section 530(b)(3)(A), which covers “expenses for tuition, fees, academic tutoring, special needs services in the case of a special needs beneficiary, books, supplies, and other equipment which are incurred in connection with the enrollment or attendance” of a K-12 student, plus certain supplementary items and services and computer technology or internet access.
| Expense | Covered by the federal scholarship? | Why |
|---|---|---|
| One on one academic tutoring | Yes | “Academic tutoring” is named in Section 530(b)(3)(A). |
| Tutoring for a public school student | Yes | Eligibility turns on being eligible to enroll in public school, not on private school attendance. |
| SAT or ACT prep course | Unsettled | Arguably academic tutoring, but no IRS guidance yet says so. |
| SAT, ACT or AP exam fees | Unsettled | Exam fees are not named; “fees” is tied to enrollment or attendance. |
| Special needs services | Yes, for special needs students | Named in the statute. |
| Books, supplies, computers, internet access | Yes | Named in the statute. |
| Cash to parents | No | Only receipt backed reimbursements are allowed. |
Sources: 26 U.S.C. 25F and 530; proposed regulations REG-117199-25 (Federal Register, October 2, 2026).
Is your state in? All 50 states and DC
Quick answer
As of the IRS list dated September 14, 2026, 30 states had opted in to the federal program. New York announced its intent but had not finalized. Arizona’s and Wisconsin’s opt-in bills were vetoed, Hawaii, Minnesota, New Mexico and Oregon declined, and 14 jurisdictions, including Connecticut, New Jersey, California and Pennsylvania, were undecided.
Federal tax credit scholarship participation
Status of all 50 states and DC as of October 1, 2026
Sources: IRS Federal Scholarship Tax Credit page (list as of September 14, 2026), EFTC state tracker (October 1, 2026), Ballotpedia. ConnectPrep count.
| State | Federal tax credit (2027) | State ESA or tutoring account | Tutoring covered? | Test fees or prep? |
|---|---|---|---|---|
| Alabama | Opted in | CHOOSE Act ESA | Yes | Fees and prep courses |
| Alaska | Opted in | Not reviewed | Not reviewed | Not reviewed |
| Arizona | Opt-in vetoed | Empowerment Scholarship Account | Yes | Fees and prep courses |
| Arkansas | Opted in | Education Freedom Account | Yes | SAT, ACT, AP, CLEP fees |
| California | Undecided | None found | n/a | n/a |
| Colorado | Opted in | None found | n/a | n/a |
| Connecticut | Undecided | None found | n/a | n/a |
| Delaware | Undecided | None found | n/a | n/a |
| District of Columbia | Undecided | None found | n/a | n/a |
| Florida | Opted in | FES-UA and PEP (Step Up For Students) | Yes | Test fees |
| Georgia | Opted in | Georgia Promise Scholarship | Certified educators | Not listed |
| Hawaii | Declined | None found | n/a | n/a |
| Idaho | Opted in | Parental Choice Tax Credit | Core subjects | Certain academic testing |
| Illinois | Undecided | None found | n/a | n/a |
| Indiana | Opted in | INESA (students with disabilities) | Not confirmed | Test and AP/IB fees |
| Iowa | Opted in | Students First ESA | Yes | Test, AP and admission exam fees |
| Kansas | Opted in | Tax credit scholarship (tuition) | Not confirmed | Not confirmed |
| Kentucky | Opted in | None found | n/a | n/a |
| Louisiana | Opted in | LA GATOR ESA | Yes | AP, CLEP, IB fees |
| Maine | Undecided | None found | n/a | n/a |
| Maryland | Undecided | None found | n/a | n/a |
| Massachusetts | Undecided | None found | n/a | n/a |
| Michigan | Undecided | None found | n/a | n/a |
| Minnesota | Declined | None found | n/a | n/a |
| Mississippi | Opted in | Special needs ESA | Not confirmed | Not confirmed |
| Missouri | Opted in | MOScholars | Yes | Test and AP fees |
| Montana | Opted in | Special Needs ESA | Yes | Test fees |
| Nebraska | Opted in | None found | n/a | n/a |
| Nevada | Opted in | Tax credit scholarship (tuition) | Not confirmed | Not confirmed |
| New Hampshire | Opted in | Education Freedom Account | Yes | Not confirmed |
| New Jersey | Undecided | None found | n/a | n/a |
| New Mexico | Declined | None found | n/a | n/a |
| New York | Intent announced | None found | n/a | n/a |
| North Carolina | Opted in | ESA+ (students with disabilities) | Yes | Not confirmed |
| North Dakota | Opted in | None found | n/a | n/a |
| Ohio | Opted in | ACE enrichment accounts | Credentialed instructors | Not addressed |
| Oklahoma | Opted in | Parental Choice Tax Credit | Yes (homeschool credit) | Fees and prep courses |
| Oregon | Declined | None found | n/a | n/a |
| Pennsylvania | Undecided | None found | n/a | n/a |
| Rhode Island | Undecided | None found | n/a | n/a |
| South Carolina | Opted in | Education Scholarship Trust Fund | Yes | Test and AP fees |
| South Dakota | Opted in | Tax credit scholarship (tuition) | Not confirmed | Not confirmed |
| Tennessee | Opted in | Education Freedom Scholarship | After tuition | College entrance exams |
| Texas | Opted in | Texas Education Freedom Accounts | Yes | Academic assessment costs |
| Utah | Opted in | Utah Fits All | Yes | Not confirmed |
| Vermont | Undecided | None found | n/a | n/a |
| Virginia | Opted in | None found | n/a | n/a |
| Washington | Undecided | None found | n/a | n/a |
| West Virginia | Opted in | Hope Scholarship | Yes | Testing fees |
| Wisconsin | Opt-in vetoed | None found | n/a | n/a |
| Wyoming | Opted in | Steamboat Legacy Scholarship ESA | Yes | Admission test and AP fees |
“None found” means we found no education savings account or refundable credit that families can spend on tutoring. “Not reviewed” or “Not confirmed” means we could not verify the rule from an official source. Program names link to the official program or handbook. Verified October 2, 2026; rules change often, so confirm with your program.
Participation is decided state by state, usually by the governor, and a few states moved by statute or veto override. You can track changes on the IRS participation page and the EFTC state tracker.
State ESAs: tutoring and test prep rules compared
Quick answer
Every major state education savings account below lets families pay for tutoring, but the credential each requires of a tutor ranges from a high school diploma in Arizona to a state teaching certificate plus fingerprinting in Texas. Only Arizona, Alabama and Oklahoma explicitly cover test prep courses.
Students in the largest state choice accounts
Most recent student counts reported by each program; years vary as noted
Sources: state program and treasurer pages, Step Up For Students, Texas Comptroller, Arizona Capitol Times, EdChoice. Several programs fund private school tuition first.
| Program | Tutoring and tutor rules | Test fees or prep | Payment platform | Size |
|---|---|---|---|---|
| Arizona ESA | Yes. Individual tutors need a high school diploma or higher for core subjects | Exam fees and prep courses for AP and college admission exams | ClassWallet | 100,000+ students |
| Alabama CHOOSE Act | Yes. Tutor must be accredited or hold a bachelor’s degree or state certification, plus background check | Fees for college admission tests and AP exams and related preparatory courses | ClassWallet | 34,000+ students (2026-27) |
| Arkansas EFA | Yes. Arkansas teaching license, accredited tutoring organization, higher ed teaching role, or a degree in the subject; fingerprinting | Standardized tests, AP, ACT/SAT and CLEP exams | ClassWallet | 46,578 students (2025-26) |
| Florida FES-UA | Yes. Florida educator certificate, adjunct certificate, subject degree, demonstrated mastery or approved national certification | Norm-referenced tests, AP exams and assessments related to postsecondary education | Step Up For Students | 140,147 students (2025-26) |
| Georgia Promise | Only from educators certified by the Georgia Professional Standards Commission | Not listed | Odyssey | 8,398 students (2025-26) |
| Iowa Students First | Yes, as educational therapy, with Iowa Board of Educational Examiners credentials | Standardized test, AP and postsecondary admission exam fees | Odyssey | 27,862 students (2024-25) |
| Louisiana GATOR | Yes, a tutor or tutoring service | AP, CLEP, IB and state approved assessments (SAT and ACT not named) | Odyssey | Not published |
| Missouri MOScholars | Yes | Norm-referenced tests and AP exams | Education assistance organizations | $60M appropriated (2026) |
| Oklahoma Parental Choice Tax Credit | Yes, for homeschool families | Assessment fees plus tutoring or preparatory courses for them | Tax credit through the Oklahoma Tax Commission | 39,197 students (2025-26) |
| South Carolina ESTF | Yes, in core and arts subjects | Norm-referenced tests and AP exams | ClassWallet | 10,000 students (2025-26) |
| Tennessee EFS | Yes, after tuition, from providers that meet department requirements | College entrance exams | State portal | 20,000 students (2025-26) |
| Texas TEFA | Yes. Certified or accredited educators, higher ed instructors or licensed providers, with fingerprinting | Costs related to academic assessments | Odyssey | 102,000+ students (2026-27) |
| Utah Fits All | Yes. Providers register as a business offering direct services | Not confirmed | Odyssey | 21,186 students (2026-27) |
| West Virginia Hope | Yes, but not by immediate family | Testing fees | Student First Technologies | 14,221 students (2025-26) |
| Wyoming Steamboat Legacy | Yes | College admission tests and AP exams | Odyssey | New in 2026-27 |
Sources: each program’s handbook or official FAQ, linked in the state table above and under Sources. Where a cell says “not listed” or “not confirmed,” the official materials we reviewed did not address it.
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Spotlight: Texas Education Freedom Accounts
Quick answer
Texas Education Freedom Accounts drew about 274,000 applications in their first year, and more than 102,000 students were funded for 2026-27. Accounts run on Odyssey and cover private tutoring, online courses and academic assessment costs.
| Item | 2026-27 detail |
|---|---|
| Award amounts | $10,474 for private school students, up to $30,000 for students with an IEP, up to $2,000 for homeschool students |
| Students funded | 102,000+ awarded, with nearly 145,000 on the waitlist (June 2026) |
| Tutoring | “Fees for services provided by a private tutor or teaching service” |
| Testing | “Costs related to academic assessments” |
| Tutor credentials | A current or retired educator from an accredited school, a person holding a relevant license or accreditation, or a current or retired higher education instructor, plus a national criminal history check |
| Vendor setup | Teaching certificate, fingerprint background check within 30 days, Texas Secretary of State registration, U.S. based business |
| Next cycle | 2026-27 applications closed March 17, 2026; the interest list for 2027-28 is open |
Sources: Texas Education Code Sections 29.358 and 29.359 (SB 2), Texas Comptroller, Odyssey vendor requirements.
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How the money reaches a tutor
Quick answer
Under the federal proposed rules a scholarship organization can pay a verified tutor directly, reimburse a family that submits a receipt, or run payments through a digital wallet. State ESAs mostly use marketplaces such as ClassWallet, Odyssey, Step Up For Students and Student First, where families request payment to approved providers.
Direct payment to a provider
The scholarship organization pays a tutor or tutoring company that it has verified as an appropriate provider and that is not related to the student.
Qualified reimbursement
The family pays, submits a receipt, and the organization verifies the payment and that the expense qualifies before reimbursing.
Digital wallet
A third party platform where families submit purchase requests and the platform tracks approved expenses and controls payments.
State marketplaces
ESAs in Arizona, Alabama, Arkansas and South Carolina use ClassWallet; Texas, Iowa, Georgia, Utah, Louisiana and Wyoming use Odyssey; Florida uses Step Up For Students; West Virginia uses Student First Technologies.
Key dates through 2027
October 1 to 2, 2026
Treasury and the IRS release and publish proposed regulations for the federal scholarship tax credit.
December 1, 2026
Deadline for public comments on the proposed regulations.
December 15, 2026
IRS public hearing on the proposed regulations.
Before January 1, 2027
Scholarship granting organizations must register electronically with the IRS, as reported in practitioner guidance.
January 1, 2027
Donations begin to qualify for the federal credit. Reported deadline for states to opt in for 2027.
February 15, 2027
Reported deadline for participating states to submit their lists of scholarship granting organizations for 2027.
2027 and beyond
Scholarships funded by 2027 donations become available to eligible students on timelines each scholarship organization sets.
The January 1 and February 15 dates come from practitioner and news summaries of the temporary regulations; confirm them in the final IRS guidance.
Connecticut, New York and New Jersey families
Quick answer
None of the three states has a statewide ESA, and none had finalized federal participation as of October 2026. Connecticut’s governor called opting in premature, New York announced its intent in May 2026 without finalizing, and New Jersey’s governor said she would evaluate the rules.
That means families in ConnectPrep’s home market cannot use school choice money for tutoring today. If any of the three opts in, students there with household incomes up to 300% of their area’s median could receive federal scholarships for tutoring once organizations are listed. Families there can still donate to a scholarship organization in a participating state and claim the federal credit starting in 2027.
Tutoring and test prep in Fairfield County →
How to use program funds for tutoring
- Confirm your program covers tutoring. Read the handbook’s allowable expense list, and note whether test fees or test prep are named separately.
- Check the tutor credential rule. Some states require a state certificate; others accept a degree or accredited organization.
- Ask the provider whether it is approved. In marketplace states the tutor or company must be registered on ClassWallet, Odyssey or the state’s platform before funds can move.
- Get an itemized invoice. Reimbursement programs and federal scholarship organizations require receipts that show the service, dates and student.
- Frame test prep as tutoring where needed. If your program names tutoring but not test prep, ask the program whether subject tutoring for the SAT, ACT or AP qualifies before you start.
- Watch for the federal list. If your state opts in, scholarship organizations will publish application windows for 2027.
Tutoring and test prep, wherever your family lives
ConnectPrep provides one on one tutoring, SAT, ACT, AP and CLT prep, and admissions counseling online nationwide and in person in select markets. If your family plans to use an ESA, a tax credit or a federal scholarship, tell us your state and program before you book.
We will check what your program allows, what documentation it requires, and whether its provider rules can be met, so there are no surprises when you submit a request.
- Subject tutoring for K-12 students in every core subject
- SAT, ACT, CLT and AP exam preparation
- Itemized invoices with dates, services and student name
- Executive function and study skills coaching
- College and private school admissions counseling
FAQ
Can I use an ESA to pay for a private tutor?
In most states with an education savings account, yes. Arizona, Alabama, Arkansas, Florida, Iowa, Louisiana, Missouri, South Carolina, Texas, Utah, West Virginia and Wyoming all list tutoring as an allowable expense. Most require the tutor or tutoring company to be an approved provider on the state’s payment platform and to meet a credential rule.
Can ESA funds pay for SAT or ACT prep?
Sometimes. Arizona, Alabama and Oklahoma explicitly allow preparatory courses for college admission exams. Other states, such as Florida, Iowa, Missouri and Wyoming, list exam fees but do not name prep courses, so SAT or ACT prep would usually need to qualify as tutoring. Check your program’s handbook before you book.
What is the new federal tax credit scholarship?
It is a federal income tax credit created by the One Big Beautiful Bill Act under Section 25F of the tax code. Starting January 1, 2027, taxpayers can give up to $1,700 to a scholarship granting organization and receive a dollar for dollar federal credit. Those organizations then fund scholarships for K-12 students in participating states.
Is my state participating in the federal tax credit scholarship?
As of mid September 2026, 30 states were on the IRS list of participating states. New York had announced its intent without finalizing. Arizona and Wisconsin opt-in bills were vetoed, Hawaii, Minnesota, New Mexico and Oregon declined, and 14 states, including Connecticut and New Jersey, were undecided.
Can public school students get federal tax credit scholarships for tutoring?
Yes. Eligibility depends on being eligible to enroll in a public school and on household income, not on attending a private school. The statute’s list of qualified expenses names academic tutoring, so a public school student in a participating state could receive a scholarship that pays for tutoring.
What is the income limit for the federal scholarship?
A student’s household income can be no more than 300% of the area median gross income for the prior year. Depending on location, that ranges from about $107,000 to more than $600,000, and Treasury estimates about 96% of children in participating states would qualify.
Does the federal scholarship cover test fees or test prep?
Not clearly yet. The law points to Section 530(b)(3)(A), which names tuition, fees, academic tutoring, special needs services, books, supplies and equipment, but not SAT, ACT or AP exam fees or test prep. Treasury says expense guidance will be issued separately, so watch for it before 2027.
Will the scholarship pay the tutor directly or reimburse me?
Either, depending on the scholarship organization. Under the proposed rules, an organization may pay a verified provider directly, reimburse a family against a receipt after verifying the expense, or use a digital wallet platform. It may not hand families cash except as a verified reimbursement.
Do tutors have to be certified teachers to accept ESA funds?
It depends on the state. Texas requires a teaching certificate or similar credential plus fingerprinting, Georgia requires a state certified educator, Florida accepts a certificate or a subject degree, Alabama accepts a bachelor’s degree or certification, and Arizona requires a high school diploma or higher for core subjects.
Can I use ESA money for online tutoring from an out of state company?
Often, if the company registers as a provider in your state’s program and meets its rules. Texas, for example, requires vendors to be registered with the Texas Secretary of State and to operate as a U.S. based business. Ask the tutoring company whether it is an approved provider before you book.
Can a parent or relative be paid as the tutor?
Generally no. West Virginia’s Hope Scholarship bars tutoring by immediate family, and other programs restrict payments to relatives. The federal proposed rules also bar scholarship organizations from paying vendors related to the scholarship recipient.
Can families in Connecticut, New York or New Jersey use school choice money for tutoring?
Not yet. None of the three has a statewide education savings account, and none had finalized participation in the federal tax credit scholarship as of October 2026. If a state opts in, students there could receive scholarships for tutoring starting in 2027.
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Sources
- IRS: Federal Scholarship Tax Credit (FSTC) and state participation list
- IRS: Treasury and IRS advance America’s first nationwide school choice program (October 1, 2026)
- Federal Register: Federal Scholarship Tax Credit proposed regulations (October 2, 2026)
- IRS: States may make an advance election to participate
- 26 U.S.C. 25F (Cornell LII)
- 26 U.S.C. 530 (Cornell LII)
- Stateline: Feds provide guidance on new federal K-12 scholarship tax credit program
- Forvis Mazars: IRS issues Section 25F scholarship tax credit rules
- EdWeek: Federal education tax credit rules are finally here
- EFTC: State participation tracker
- Ballotpedia: State participation in the federal K-12 education tax credit
- Texas Legislature: SB 2 (Texas Education Code 29.358 and 29.359)
- Texas Comptroller: TEFA passes 100,000 students
- Texas Education Freedom Accounts: Families
- Odyssey: Who can become a vendor in Texas
- Alabama CHOOSE Act education service provider guide
- Arkansas EFA: Information for service providers
- Florida Statutes 1002.394 (FES-UA)
- Iowa Students First ESA eligible expenses (Odyssey)
- Arizona Capitol Times: ESA program reaches 100,000 students
- Chalkbeat: Hochul opts into federal tax scholarship
- EFTC: Connecticut
- EFTC: New Jersey
This is a ConnectPrep resource page, not tax or legal advice. ConnectPrep is an independent tutoring and admissions firm and is not affiliated with the IRS, any state program or any scholarship granting organization. Program rules change often; confirm eligibility and allowable expenses with your program, and consult a tax professional about the credit. Last verified October 2, 2026.