TEFA Income Requirements: AGI, Federal Poverty Level Tiers, and What Counts

TEFA doesn't have a hard income cutoff — families at any income level can apply. But your household income determines which priority tier you land in, and that directly affects whether you receive an award when the program is oversubscribed.

Understanding how AGI maps to priority tiers is the difference between a funded account and a waitlist notice.

How the Comptroller Calculates Income

The sole income metric is federal Adjusted Gross Income (AGI) from your most recent IRS Form 1040 (line 11). No alternative documentation is accepted — not W-2 forms, not pay stubs, not bank statements.

This was a hard line drawn in the final administrative rules adopted December 2025. During the inaugural application cycle, approximately 25,500 applications were disqualified, many because families submitted alternative income documentation instead of the actual 1040.

If you did not file a federal tax return, you must complete an official Comptroller Income Affidavit available through the application portal.

The Four Priority Tiers

When total applications exceed available funding — which happened in the inaugural cycle, with over 274,000 applications against a $1 billion cap — awards follow a statutory priority system based on household AGI measured against the Federal Poverty Level (FPL):

Tier 1 — Students with disabilities. Household income ≤ 500% FPL. Requires an active IEP, FIIE, or approved disability documentation. Highest priority.

Tier 2 — Low-income students. Household income ≤ 200% FPL. For a family of four, the 200% FPL threshold is $60,000.

Tier 3 — Middle-income students. Household income > 200% FPL and ≤ 500% FPL. Awards within this tier are distributed by lottery when demand exceeds supply.

Tier 4 — Higher-income students. Household income > 500% FPL. Statutorily capped at a maximum of 20% of total program funds. Within Tier 4, families whose children previously attended public school receive sub-priority.

The priority system means a Tier 2 family is funded before any Tier 3 family, regardless of application date. Within each tier, when demand exceeds supply, a lottery determines who gets awarded.

What AGI Includes (and Doesn't)

AGI is your total gross income minus specific above-the-line deductions. It includes:

• Wages, salaries, and tips
• Business income (Schedule C)
• Capital gains
• Retirement distributions
• Rental income

AGI does not include child support received, gifts, or most types of non-taxable income. It also reflects above-the-line deductions like student loan interest, IRA contributions, and self-employment tax.

For families with variable income (self-employed, gig workers, or those with significant capital gains in one year), which tax year you use matters. The application accepts the most recently filed return — if your 2025 return shows a lower AGI than 2024, filing the 2025 return before submitting your TEFA application could place you in a higher-priority tier.

The Homeschool-Specific Angle

Income tier affects your priority for receiving an award, but it does not change the award amount for homeschoolers. Every homeschool participant receives $2,000 regardless of tier — the income tiers only determine who gets funded first when the program is oversubscribed.

This is different from the private school track, where Tier 1 disability students can access up to $30,000. Homeschool families with disabled children are still capped at $2,000.

What Happens If You're Waitlisted

If your tier doesn't receive funding in the initial allocation, you may receive a waitlist notice. Check the next cycle's portal instructions before assuming your application carries forward.

Your position on the waitlist is determined by your tier, not by when you applied. Moving to a lower-income tier (through changed circumstances or a different tax year filing) would improve your priority.

The Texas Education Freedom Accounts Parent Guide includes priority tier scenarios showing exactly how the lottery works for different family configurations and income levels.

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