State-by-State Projections

Methodology

Redirectors

We wanted to identify the taxpayers for whom making a donation under FSTC would be the equivalent of simply redirecting their money from the IRS to a scholarship granting organization (SGO). As such, we identified taxpayers likely to owe at least the full credit in federal income tax. Using IRS Statistics of Income data for tax year 2023, we count three groups separately. The first is single filers and other non-joint filers, such as married filing separately, with adjusted gross income (AGI) above $50,000. The second is heads of household with AGI above $80,000. The third is joint returns with AGI above $85,000. See the “Estimated Redirectors” column for the detailed calculations.

Why $50,000, $80,000, and $85,000 AGI?

We are intentionally conservative in setting our AGI thresholds. To choose them, we used IRS data for tax year 2017, the most recent year that reports dependents, to estimate how many dependents the typical return in each group has.² We then calculated the AGI at which a household with that many dependents would owe enough federal income tax to use the full credit. For single filers and other non-joint filers, we use $50,000. These filers average fewer than 0.1 dependents, and they typically reach $1,700 of federal liability at roughly $33,000 of AGI. For heads of household, we use $80,000. Those above that income average about 1.3 dependents, and they typically reach $1,700 of remaining federal tax liability after applying the child tax credit at roughly $65,000 of AGI. We use $80,000, which is close to the roughly $78,000 that a head of household with two children needs, to remain conservative. For joint filers, we use $85,000. Those above that income average about one dependent, and a typical couple reaches the $3,400 of liability needed to use the full credit at roughly $83,000 of AGI. In addition, our estimates do not count the donations that taxpayers with AGIs under these cutoffs might make; some might donate the full amount and some might donate less than that. After considering our various assumptions and estimates, we believe that the number of “Redirectors” we’ve calculated is a conservative (ie. low) estimate.

Estimated Donations

To calculate estimated donations, we assume that a given percentage of Redirectors will give the maximum credit, which is $1,700 for each non-joint return, including head of household, and $3,400 for each joint return. Note: for our purposes, Redirectors are, by definition, taxpayers who would incur no net cost when making a contribution. Since they already owe either $1,700 or $3,400 (joint filers), they would be able to make the contribution to a local SGO at no net cost. Our calculations assume, for the sake of keeping our estimates conservative, that unless a single filer has a tax liability of $1,700 or joint filers have a combined tax liability of $3,400, they will contribute nothing to an SGO. This has the effect of keeping our estimates lower than they otherwise would be.

Estimated “Redirector” Participation Rate

For several reasons, it is hard to estimate the expected “Redirector” participation rate. While existing state-level tax credit programs have relatively low participation rates, hovering in the 2% to 3% range, there is reason to believe that participation rates in FSTC might be higher. Here are some reasons worth considering:

• Apples to Oranges
  Unlike FSTC, state tax credit programs sometimes carry aggregate caps and allow for very large individual contributions. For example, Illinois’s program permitted single donations of up to $1,000,000 but capped total credits at $75 million. That created a rational incentive for Scholarship Granting Organizations (SGOs) to focus primarily on a handful of high-net-worth donors, rather than building broad-based participation. As a result, participation rates by the general taxpayer population stayed low, even if total dollars raised were significant.
  
  FSTC is structured differently. With a maximum credit of $1,700 per non-joint filer and $3,400 per joint filer, it is not possible to rely on a few mega-donors. To succeed, SGOs must raise money at scale, from ordinary taxpayers, at household-level amounts. This structural feature changes the incentive system and makes widespread participation a necessity, not an afterthought.
  
  Similarly, it is possible, if not likely, that FSTC will allow for more leeway than state tax credit systems in the kinds of programs that SGOs can design. Some might provide tuition support for private schools, some might provide tutoring support for public school students, while others might take markedly different, creative approaches. This flexibility might lead to programs that appeal to local donors and drive participation upward.
• FSTC’s National Scale and Visibility
  Unlike fragmented state programs, FSTC is a large federal program that may receive broad media coverage and attract public attention. Aside from helping to raise the number of taxpayer participants, the structure of FSTC is likely to also increase the number of SGOs. Each SGO will have the incentive to proactively market the program and solicit contributions.
• Supportive Federal Roles
  A proactive, supportive Treasury Department could simplify the claiming process, work with tax preparers, and run awareness campaigns that may make participation more likely.
• Governor Leadership
  Governors who opt in will have a strong incentive to promote the program locally, potentially boosting taxpayer awareness and participation.
• Public School Participation
  The fact that public schools can benefit through aligned SGOs means that even families loyal to their local public schools may be encouraged to redirect their tax dollars in this way.

How Our Numbers Compare

The American Federation for Children (AFC) Growth Fund published its own estimate in September 2026. AFC simulates 2027 tax returns, growing incomes about 18% and the number of filers about 3% from 2023. Every filer with any federal tax liability is counted as an eligible donor, and each gift is capped at the smaller of $1,700 or the filer’s liability. In October, AFC updated its estimates to include the $3,400 joint filer credit and now calculates $263.0 billion of capacity at 100% participation. While AFC’s methodology and ours differ, we believe they are both based on reliable data and a thorough, thoughtful analysis. Users of either of our set of figures can be confident in the numbers they cite.