Ramsey Show Ad Promises a $1,700 Tax Credit, But Donors Cannot Use It Yet

A sponsor on The Ramsey Show told listeners they could be “outrageously generous and keep more of your money away from the IRS,” suggesting that a donation through ACE Scholarships could bring a federal tax credit of up to $1,700 for individuals or $3,400 for married couples filing jointly. What the ad did not make clear is that the credit does not apply yet.

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The paid read aired on a November 3, 2026 episode of The Ramsey Show. It said donors who give through ACE Scholarships could receive “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.”

The segment was a sponsor message, not advice from the hosts. Jade Warshaw and Dr. John Delony hosted the episode and did not address the ad. The read also said ACE has provided “over 120,000 scholarships to families. Almost $400 million.” Those figures came from the sponsor and were not verified on air.

What the ad left out is the start date. The IRS said in a recent notice: “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.” A donation made before then does not qualify for the federal credit.

Why the $1,700 Figure Only Works in the Right Year

The amounts in the ad are real, and the gift can indeed end up costing nothing. But that outcome depends on both the donor’s circumstances and the calendar. None of that was explained in the pitch.

The reason is the difference between a credit and a deduction. A deduction lowers the income that gets taxed, so the value depends on your tax bracket. A credit reduces your tax bill directly. Under the law, the credit equals qualified contributions up to $1,700 per taxpayer each year (26 U.S.C. § 25F(b)(1)). Give $1,700, and your tax bill can fall by $1,700.

The credit is nonrefundable, so it can reduce tax liability to zero but cannot create a refund beyond that. Any unused amount may carry forward for as long as five years. The same contribution also cannot be claimed twice; if it qualifies for the credit, it cannot also be taken as a charitable deduction (§ 25F(e)).

Why Timing Changes the Cost

Consider a single filer in the 22% bracket who hears the ad and gives $1,700 in December. Section 25F applies only to taxable years ending after Dec. 31, 2026, so no credit is available for that gift.

In that case, the donor’s best benefit is a standard charitable deduction, worth $374 if they itemize. That means the donation effectively costs $1,326.

If the same donor gives the same $1,700 in January 2027 to an approved scholarship organization, the credit lowers federal tax by the full amount. As long as the donor owes at least that much, the gift costs nothing. For this example, waiting a few weeks changes the value by about $1,300.

Timing is only one requirement. A state must choose to participate and submit to the IRS a list of approved scholarship granting organizations, or SGOs. The IRS says donations may go to an SGO in any participating state, “regardless of their state of residence.” States are still deciding whether to join, and Oklahoma officials are preparing for the credit.

There are two more restrictions. If a state offers its own credit for the same donation, the federal credit is reduced by that amount (§ 25F(b)(2)). The cap also applies per person. A married couple can claim up to $3,400 only on a joint return, and contributions above that level do not generate extra credit.

Four Things to Check Before Donating

1. Wait until 2027 before making the gift. Under Treasury’s proposed rules, only contributions made beginning Jan. 1, 2027, are expected to qualify for the credit. A 2026 donation can only be used as a regular deduction, and only if you itemize.
2. Confirm that the state has opted in. The IRS says it will publish a list of participating states on IRS.gov. If a state misses the deadline to submit its SGO list, no organization in that state will qualify for that year.
3. Verify that the organization appears on the IRS SGO list. The proposed rules generally “permit taxpayers to rely on an organization’s inclusion on the IRS SGO list.” The IRS list is the key proof, so check it before donating.
4. Estimate your 2027 tax liability. Use the IRS Tax Withholding Estimator. If your federal income tax will be less than $1,700, part of the credit will be carried forward, meaning the full donation will still cost you something this year.

What to watch next is whether more states opt in and when the IRS releases its lists of participating states and approved SGOs. Until those lists are public, donors cannot know for sure whether a gift will qualify.