Scholarship tax credits: Arkansas PIAK and the new federal credit (2027)

Not tax advice. Donors should ask their own tax preparer how these credits apply to them, especially when combining the two.

The idea in one line

A donor gives to a scholarship-granting organization (SGO) and gets a tax credit. The SGO gives scholarships to eligible students, and families use them for tuition at participating schools. Your school doesn't receive a grant. Your families get help paying you.

Arkansas: PIAK (Philanthropic Investment in Arkansas Kids)

Donors get a state income tax credit for "one hundred percent (100%) of eligible contributions made to a scholarship-granting organization" (Act 904 of 2021).
The cap. DFA issues credits "on a first-come, first-served basis up to $6,000,000 per calendar year." The LEARNS Act raised the cap to $6 million and added a 5% yearly increase when 90% of credits are used. We couldn't confirm the 2026 certified cap on a state page.
Students need family income "less than or equal to two hundred percent (200%) of the federal poverty guidelines," plus one of these: in public school the year before, entering school in Arkansas for the first time, renewing a PIAK scholarship, or moving from another state (limits apply).
Scholarship size. The law caps the average scholarship at 80% of prior-year foundation funding for K-8 and 90% for grades 9-12. We haven't confirmed dollar amounts on a state source.
Schools. The law makes each SGO "Ensure that participating private schools" meet health and safety laws, hold valid occupancy, and give a nationally norm-referenced test to scholarship students in grades 3–10. The Reform Alliance's own school form says schools must be approved by it and be accredited or in the process. That comes from the SGO, not a state page.
To participate: contact an SGO (The Reform Alliance and ACE Scholarships both describe themselves as PIAK SGOs on their own sites).

Federal: the Federal Scholarship Tax Credit (IRC section 25F)

What it is. The IRS says: "Beginning Jan. 1, 2027, individual taxpayers may be able to claim a Federal Scholarship Tax Credit (FSTC) for certain cash contributions up to $1,700 to Scholarship Granting Organizations (SGOs)."
States must opt in. "A state … must choose to participate in the FSTC and provide a list of SGOs in that state to the IRS."
Arkansas has opted in. The IRS lists Arkansas among 30 states that "have made an advance election to participate under Section 25F for 2027" (as of Sept 14, 2026). The Governor announced it Jan 16, 2026.
Still unknown:
Which SGOs will be on Arkansas's list. Under proposed rules filed Oct 1, 2026, states can perfect their 2027 list until Feb 15, 2027.
Which state agency certifies SGOs.
Whether microschool or homeschool costs will count. Treasury says more guidance on "qualified expenses and schools" is coming. For now, a "school" is a K-12 school "as determined under state law."
Students are eligible with household income up to 300% of area median income, and they must be eligible to enroll in public school.
Stacking. Under the proposed rules, the federal credit is reduced by any state credit for the same gift (the IRS example: a $500 state credit leaves $1,200). So a gift that also earns a PIAK credit may not earn the full federal credit. Donors should ask a tax pro.

What a school can do now

Ask the SGOs you know (for example, The Reform Alliance) how schools join for 2027, and what they need from you.
Get your paperwork in order. Accreditation status, testing plan, occupancy certificate and background-check policy come up in both programs.
Tell families honestly. Scholarship availability depends on donors and on SGO rules. Don't promise anyone a scholarship.
Watch for the IRS's SGO list on irs.gov. We'll update this page when Arkansas's list is published.

Arkansas: PIAK (Philanthropic Investment in Arkansas Kids)

Donors get a state income tax credit for "one hundred percent (100%) of eligible contributions made to a scholarship-granting organization" (Act 904 of 2021).

The cap. DFA issues credits "on a first-come, first-served basis up to $6,000,000 per calendar year." The LEARNS Act raised the cap to $6 million and added a 5% yearly increase when 90% of credits are used. We couldn't confirm the 2026 certified cap on a state page.

Students need family income "less than or equal to two hundred percent (200%) of the federal poverty guidelines," plus one of these: in public school the year before, entering school in Arkansas for the first time, renewing a PIAK scholarship, or moving from another state (limits apply).

Scholarship size. The law caps the average scholarship at 80% of prior-year foundation funding for K-8 and 90% for grades 9-12. We haven't confirmed dollar amounts on a state source.

Schools. The law makes each SGO "Ensure that participating private schools" meet health and safety laws, hold valid occupancy, and give a nationally norm-referenced test to scholarship students in grades 3–10. The Reform Alliance's own school form says schools must be approved by it and be accredited or in the process. That comes from the SGO, not a state page.

To participate: contact an SGO (The Reform Alliance and ACE Scholarships both describe themselves as PIAK SGOs on their own sites).

Federal: the Federal Scholarship Tax Credit (IRC section 25F)

What it is. The IRS says: "Beginning Jan. 1, 2027, individual taxpayers may be able to claim a Federal Scholarship Tax Credit (FSTC) for certain cash contributions up to $1,700 to Scholarship Granting Organizations (SGOs)."

States must opt in. "A state … must choose to participate in the FSTC and provide a list of SGOs in that state to the IRS."

Arkansas has opted in. The IRS lists Arkansas among 30 states that "have made an advance election to participate under Section 25F for 2027" (as of Sept 14, 2026). The Governor announced it Jan 16, 2026.

Still unknown:

Which SGOs will be on Arkansas's list. Under proposed rules filed Oct 1, 2026, states can perfect their 2027 list until Feb 15, 2027.

Which state agency certifies SGOs.

Whether microschool or homeschool costs will count. Treasury says more guidance on "qualified expenses and schools" is coming. For now, a "school" is a K-12 school "as determined under state law."

Students are eligible with household income up to 300% of area median income, and they must be eligible to enroll in public school.

Stacking. Under the proposed rules, the federal credit is reduced by any state credit for the same gift (the IRS example: a $500 state credit leaves $1,200). So a gift that also earns a PIAK credit may not earn the full federal credit. Donors should ask a tax pro.

What a school can do now

Ask the SGOs you know (for example, The Reform Alliance) how schools join for 2027, and what they need from you.

Get your paperwork in order. Accreditation status, testing plan, occupancy certificate and background-check policy come up in both programs.

Tell families honestly. Scholarship availability depends on donors and on SGO rules. Don't promise anyone a scholarship.

Watch for the IRS's SGO list on irs.gov. We'll update this page when Arkansas's list is published.