North Carolina’s Educational Choice for Children Act (ECCA) provides individuals who donate to K-12 scholarship-granting organizations (SGOs) with a 100 percent federal tax credit of up to $1,700. According to a national analysis by the American Federation for Children (AFC), nearly 1.7 million children — or 93 percent of North Carolina’s K-12 student population — would become eligible for scholarships under the new federal school choice tax credit.
The ECCA, also known as the Education Freedom Tax Credit (EFTC), is a federal program created under the One Big Beautiful Bill Act, which was signed into law by President Donald Trump in July 2025. The legislation extends the temporary individual income and estate tax provisions introduced under the Tax Cuts and Jobs Act (TCJA) of 2017, among other measures.
The analysis, prepared by AFC Senior Fellow Patrick Graff, highlights the eligibility of children across the United States under the EFTC on a state-by-state basis. According to the report, 51.7 million children nationwide are eligible for K-12 scholarships through the program.
The report considers North Carolina among the 22 states where state law treats home schools as private or religious schools. However, it notes that the U.S. Treasury Department could issue final rules that interpret the eligibility criteria differently.
The Tar Heel State, a popular nickname for North Carolina, has an estimated 93 percent eligibility rate — one percentage point above the national average. Among the 10 most populous U.S. states, Texas, Florida, New York, Ohio, Georgia, and North Carolina have opted into the program, while California, Illinois, Pennsylvania, and Michigan have not.
North Carolina’s Senate made significant changes to House Bill 87 following objections raised by Governor Josh Stein, paving the way for the state to opt into the program in June. As a result, eligible donations made under the scheme will qualify for the federal tax credit beginning in January 2027.
“For governors and states who have taken swift action to opt in, thank you, and for governors still considering opting in, what are you waiting for?” AFC Chief Executive Officer Tommy Schultz said in a statement. “Children and families in your states, by the millions, are waiting for the educational resources that will support them through the tax credit.”
The program will take effect in 2027, allowing eligible individuals to claim a dollar-for-dollar federal tax credit of up to $1,700 annually for donations made to scholarship-granting organizations (SGOs). These organizations can, in turn, provide scholarships to students for expenses such as private school tuition, tutoring, dual-enrollment programs, and other eligible educational costs.
Under the law, a student must be eligible to enroll in a public elementary or secondary school and belong to a household with an income not exceeding 300 percent of the area’s median gross income, as determined by the U.S. Department of Housing and Urban Development and adjusted for household size.