Alaska opens applications for K-12 scholarship groups, and eligibility is capped by household income

Alaska nonprofits can apply now to hand out K-12 scholarships paid for by donations that earn a new federal tax credit. The state expects to approve its first group of those organizations by Sept. 30, though it conditions that on federal regulations Treasury and the IRS have not yet issued.

Governor Mike Dunleavy announced Thursday that Alaska is accepting applications from nonprofits seeking approval as Scholarship Granting Organizations under the federal Education Freedom Tax Credit, created by Congress in July 2025 as Internal Revenue Code Section 25F. Applicants must email a signed letter of interest and a copy of their IRS 501(c)(3) determination letter to [email protected]. The letter must attest that the organization meets federal requirements. Applications are evaluated on a rolling basis, so a nonprofit hoping to join the first group would need to file before Sept. 30.

Beginning Jan. 1, 2027, individual taxpayers may contribute to an approved organization and claim a dollar-for-dollar federal income-tax credit of up to $1,700 a year.

The organizations then award scholarships, which the state says may cover tuition, tutoring, books, classroom supplies, career and technical education costs, and services for students with disabilities.

Eligibility is limited by income. Federal law limits scholarships to students in households earning no more than 300 percent of area median gross income, and requires each organization to verify household income and family size. The governor's release does not mention that test. It says a recent analysis estimates 95 percent of Alaska's students will be eligible, without identifying the analysis.

Federal law requires each organization to award scholarships to at least ten students who do not all attend the same school, and to devote at least 90 percent of its income to scholarships. Because contributions from many donors can be pooled, individual awards may exceed $1,700.

"We want Alaska organizations thinking now about the students they can serve and the partnerships they can build," Commissioner of Education and Early Development Deena Bishop said.

The governor's release contains no opposing voice.