For families & donors
Two new tax rules worth knowing about
Two recent federal changes make Christian school more affordable — one for families saving in a 529 account, and one for donors who want their giving to fund scholarships. Here is what each one does.
For families
Scholarships are coming in 2027. Don't rule KCA out on price.
Apply to KCA now. Beginning in 2027, eligible families may apply directly to an approved Scholarship Granting Organization. The SGO—not KCA—will verify eligibility, set its application dates, and decide awards. Meeting the eligibility rules does not guarantee a scholarship; awards depend on available donations and the SGO's policies.
529 savings can now pay for K-8 school
Beginning in 2026, a family can withdraw up to $20,000 per child per year from a 529 savings account for K-12 expenses — double the old $10,000 limit — and the list of allowed expenses is wider than tuition alone. For a KCA family, that means money saved in a 529 can help pay for school now, not only college later.
How a KCA family might use it
A grandparent opened a 529 for your daughter years ago. Starting in 2026 you can withdraw from that account to cover her KCA tuition for the year — paid through your normal monthly payment plan — instead of waiting until college.
Tuition
Tuition at a private or religious K-8 school like KCA.
Books & materials
Curriculum, workbooks, and required classroom materials.
Tutoring & testing
Tutoring, standardized testing fees, and dual-enrollment costs.
Educational therapies
Certain therapies for a student with a disability.
Important
Before you withdraw, talk with your tax preparer
The $20,000 limit and the wider list of expenses are federal rules. Not every state's 529 plan follows the federal rules for state tax purposes, and paperwork differs by plan. Confirm with your 529 plan provider or your own tax preparer before taking money out. KCA staff can explain what the school charges, but we cannot give tax advice.
Publication 970 is the IRS guide your tax preparer will reference. Note that the IRS questions-and-answers page still describes the older $10,000 tuition-only limit in places, because it has not been fully rewritten since the law changed. The $20,000 limit and the wider expense list come from the federal law signed July 4, 2025, effective for 2026.
For donors
You may qualify for a federal tax credit of up to $1,700.
For grandparents, church members, alumni, and local business owners
Starting January 1, 2027, individual taxpayers may qualify for a dollar-for-dollar federal credit of up to $1,700 for qualifying cash gifts to a listed Scholarship Granting Organization. The SGO pools donations and awards scholarships; a donor cannot direct a gift to a named child, including a child or grandchild in the donor's family.
A credit, not a deduction
A deduction lowers the income you are taxed on. A credit lowers the tax you owe, dollar for dollar — up to $1,700 per taxpayer.
Kentucky is participating
The credit only works in states that opt in. Kentucky opted in and opened sign-ups for scholarship organizations in the summer of 2026.
Cash gifts by individuals
The federal credit applies to qualifying cash gifts by individual taxpayers. It is not available to corporations.
No double tax benefit
A donor cannot also claim the same gift as a federal charitable deduction. Ask your tax preparer how the credit applies to you.
What KCA can and cannot do
KCA is a receiving school, not an SGO
KCA can accept a qualifying scholarship and apply the payment to a family's school account. KCA does not collect credit-eligible gifts, verify household income, select recipients, or promise awards. Families apply to the SGO, and the SGO makes every award decision.
KCA has not announced a preferred SGO partner. We will name a partner only after its Kentucky listing, family process, payment terms, and written agreement with KCA are confirmed. KCA will also explain how it handles awards from other listed Kentucky SGOs.
For families considering an application
The SGO confirms eligibility
Federal law generally limits eligibility to students who can enroll in a public elementary or secondary school and households at or below 300% of the area's median income for the prior year. The SGO—not KCA—will confirm the income limit for your household, tell you which records it needs, and publish its application dates. Eligibility does not guarantee an award.
What to do now
Practical next steps
If you are a KCA family
Ask your tax preparer about the 529 change before this year's tuition payments, and call the office if you want help understanding what applies to your plan.
Tuition & enrollmentIf you want to give now
Gifts made directly to KCA support KCA's funds and are not SGO gifts. The new federal credit begins with qualifying 2027 cash gifts made to a listed SGO—not to KCA—and an SGO gift cannot be earmarked for a named student.
Give & partnerIf you have questions
The office is glad to talk it through, and to tell you plainly what we do and do not know yet about the scholarship credit.
Contact the officeThe figures and dates above come from the federal law signed July 4, 2025, and later IRS guidance. This page is general information, not legal, tax, or accounting advice, and it is not a promise of scholarship funding. IRS forms and additional guidance for 2027 may still change. Please talk with your own tax preparer about your situation.