SGO vs. Voucher vs. ESA: What's the Difference?

Tax-credit scholarships through SGOs

In a tax-credit scholarship program, the government offers donors a credit for gifts to qualifying nonprofits. The federal version, Section 25F, allows up to $1,700 per individual for designated cash gifts to SGOs on a participating state's list, starting in 2027.[source] Ohio has its own state version.[source] The SGO verifies eligibility and awards scholarships; donors can't earmark gifts for a particular student.[source]

Vouchers

A voucher program uses government funds to pay some or all of a student's tuition at a participating private school, under rules set by the state. Eligibility, amounts, and participating schools vary widely. In Ohio, state-funded programs such as the EdChoice Scholarship are run by the Ohio Department of Education and Workforce.

Education savings accounts

An ESA places government funds in an account that a family can use for a list of approved education expenses, which may go beyond tuition. Rules differ by state, including who qualifies and how spending is reviewed.

Can a family use more than one?

Sometimes. It depends on each program's rules. Under the federal proposed regulations, participating states may not limit the type of school a federal scholarship recipient attends or the types of qualified expenses scholarships may fund.[source] Ask the programs involved before combining awards.

What to check in your state

• Which programs exist, and whether your state participates in the federal credit.
• Income, residence, and grade requirements.
• Which schools and expenses are covered, and application deadlines.

The IRS keeps the list of participating states for the federal credit.[source]