‘Keep More of Your Money Away From the IRS’: The $1,700 Credit Ramsey Show Listeners Can’t Claim Yet

A paid ad on the November 3, 2026 episode of The Ramsey Show told listeners to “be outrageously generous and keep more of your money away from the IRS.” The ad says people who give through ACE Scholarships will get “a federal tax credit up to $1,700 for individuals or $3,400 for married couples filing jointly, meaning it could end up costing you nothing.”

This was a sponsor read, separate from the hosts’ own advice. Jade Warshaw and Dr. John Delony hosted the episode, and neither one said anything about the ad. The read also claimed ACE has given “over 120,000 scholarships to families. Almost $400 million.” Those numbers come from the sponsor, and nobody on air checked them.

The ad never said when the credit starts. The IRS has. On October 29, the agency posted: “Beginning in 2027, the new Education Freedom Tax Credit will support scholarships for K-12 education expenses, helping families access educational options that meet their children’s needs.” If you send a check this week, you get no federal credit at all.

Why the $1,700 Only Counts After New Year’s Day

The dollar amounts in the ad are correct, and the gift really can end up costing you nothing. But that only works for some donors, and only on a certain calendar. The ad explained neither.

Everything in the pitch depends on how a credit differs from a deduction. A deduction shrinks the income you pay tax on, so what it saves you depends on your tax bracket. A credit comes straight off your tax bill. Under the law, the credit is your qualified contributions, up to $1,700 per taxpayer each year (26 U.S.C. § 25F(b)(1)). If you give $1,700, you owe $1,700 less in tax.

The credit is nonrefundable. It can bring your tax bill down to zero, but it won’t pay you anything past that. Any unused credit carries forward for up to five years. You also can’t claim the same money twice. If a gift gets the credit, you can’t deduct it as a charitable contribution too (§ 25F(e)).

When You Send the Money Decides What It Costs

Say a single filer in the 22% bracket (an example) hears the ad and gives $1,700 in December 2026. Section 25F only covers taxable years ending after Dec. 31, 2026, so there’s no credit to claim.

The best this donor can get is a regular charitable deduction, worth $374 if they itemize. The gift really costs them $1,326.

Now say the same donor sends the same $1,700 in January 2027 to an approved scholarship group. The credit cuts their federal tax by $1,700. As long as they owe at least that much, the gift costs them nothing. Sending the money a few weeks later is worth about $1,300 to this donor.

Timing is one of several tests. A state has to voluntarily elect to participate and send the IRS a list of approved scholarship granting organizations (SGOs). Your money has to go to a group on that list. The IRS says you can give to an SGO in any participating state, “regardless of their state of residence”. States are still sorting out whether they’ll join, and officials in Oklahoma are getting ready for the credit.

There are two more limits. If your state also gives you a credit for the same gift, your federal credit shrinks by that amount (§ 25F(b)(2)). The cap is also per person. A married couple hits $3,400 only on a joint return, and giving more than the cap gets no additional credit.

Four Checks Before You Give ACE or Anyone Else a Dollar

1. Wait until 2027 to give. Under Treasury’s proposed rules, taxpayers can count on the credit for contributions made beginning Jan. 1, 2027. A gift made in 2026 gets, at best, a regular deduction, and only if you itemize.
2. Make sure the state has opted in. The IRS says it will release a list of states that made an advance election on IRS.gov. If a state misses its deadline to send in its SGO list, no group in that state qualifies for that year.
3. Make sure the group is on the IRS SGO list. The proposed rules generally “permit taxpayers to rely on an organization’s inclusion on the IRS SGO list”. Only the IRS list counts as proof. Look for the group on the list before you pay.
4. Estimate your 2027 tax bill. Run the IRS Tax Withholding Estimator. If you’ll owe less than $1,700 in federal income tax, part of your credit gets pushed to later years. In that case, giving $1,700 still costs you something this year.

The next things to watch are which states opt in and when the IRS posts its lists of participating states and approved SGOs. Until both are public, no donor can confirm a gift qualifies.

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