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Give monthly through the new federal scholarship tax credit.

Starting in 2027, a federal tax credit gives back what you donate to a scholarship organization, dollar for dollar, up to $1,700 a person. If federal income tax comes out of your paycheck, you can have a little less withheld each month and send that money to scholarships instead.

Here’s how it works:

1. Find your safe amount. The calculator below works out how much of the credit you can likely use.
2. Set up a monthly gift. Give through ACE Scholarships, our scholarship partner.
3. Update your W-4. Your paycheck then withholds about the same amount less.
4. Claim the credit when you file. It makes up for the smaller withholding.

This page is general information, not tax advice. We can’t promise you’ll qualify or what your tax outcome will be. If your situation is complicated, talk to a tax adviser before you change your withholding.

Step 1: Find your safe amount

The credit can’t be more than the federal income tax you owe for the year. The calculator leaves a cushion so you’re less likely to owe in April.

The calculator isn’t running in your browser. As a rule of thumb, give the smaller of $1,700 for each person giving and 90% of the tax after credits on your most recent return.

Step 2: Set up your monthly gift

1. Go to ACE Scholarships’ giving page and choose a monthly gift of the amount above.
2. Mark it as a federal tax credit (Section 25F) gift, and choose North Carolina. The credit only counts a gift you mark this way when you make it.
3. You can name ALC Mosaic as the school you want to support. You can’t direct a gift to a particular student, including your own child.
4. Married and both giving? Each of you sets up your own gift, in your own name.
5. A gift counts for the year you make it, so the last one needs to be charged or mailed by December 31. A pledge you haven’t paid yet doesn’t count.

The rules are still being written. North Carolina has opted in for 2027, but it sends its list of approved scholarship organizations to the IRS by February 15, 2027, and a gift counts only if the organization is on that list. The IRS rules are proposed, not final. We’ll update this page as both are settled.

Step 3: Update your W-4

Change your W-4 after your first gift goes through, not before. Most employers let you change it in their payroll or HR site; otherwise ask HR for a new Form W-4.

1. Find Step 3, “Claim Dependents and Other Credits.”
2. Look at the total already there. Many parents already have an amount for their children.
3. Add your yearly gift amount to that total. Don’t replace it.
4. Leave everything else as it is. Sign and submit.

Two jobs in your household? Make the change on one W-4 only, ideally for the highest-paying job, even if you’re both giving. Changing both would cut your withholding twice.

Don’t claim “exempt” or set your withholding to zero. That stops all federal withholding, and you’d likely owe a large bill and a penalty.

Self-employed? Skip the W-4. Lower each quarterly estimated payment by a quarter of your yearly amount instead.

Step 4: Check, then claim

1. On your next paycheck, look at “Federal income tax” (or “FIT”). It should drop by about the amount per paycheck above. Your state tax won’t change.
2. By January 31, ACE sends you a statement of your gifts with your donor number. Keep it.
3. When you file, claim the credit on Form 8525 with your donor number and the total you gave. Tax software will ask about it.
4. Giving again next year? Keep the W-4 as it is. If you stop giving, take the amount out of Step 3 right away.

The figures we use

The IRS hadn’t published its official 2027 figures when we wrote this page, so these are projections. The brackets and standard deductions are the IRS’s 2026 figures (Revenue Procedure 2025-32) adjusted by the projected 2027 inflation factor of 3.24%, as published by Nowflation on November 2, 2026. We’ll update them when the IRS publishes the official figures.

• The $1,700 credit per person is set in the law (IRC Section 25F) and the IRS’s page on the credit. A married couple filing jointly can claim up to $3,400 if each spouse gives.
• The child tax credit was $2,200 in 2026 and rises with inflation in $100 steps. We use a projected $2,300, which keeps the estimate on the safe side; if it stays at $2,200, you have $100 more room per child. We don’t reduce it for high incomes, which also keeps the estimate on the safe side.
• The wage estimate counts wages and the standard deduction only. It doesn’t account for itemizing, other credits or income besides wages.
• Any credit you can’t use carries forward for up to five years, but it doesn’t come back to you as a refund.