Treasury and the IRS could release the first major rules for the federal scholarship tax credit as soon as Friday or early next week. There is no announced release date, but Treasury has committed to issuing proposed rules by the end of September.
Why it matters
These rules will shape how states identify scholarship granting organizations (SGOs), how SGOs operate and report contributions, and what it takes to be ready when taxpayers can begin making credit eligible contributions in January 2027. Treasury has said states, SGOs and taxpayers should be able to rely on the proposed rules for 2027.
Based on Treasury’s June preview, we expect the rules to address:
- SGO finances: How to calculate the requirement that SGOs spend at least 90% of their income on scholarships, including a potential safe harbor for funds held in a separate account.
- State participation: What it means for an SGO to be “located in” a state, explain how participating states create and submit their list of SGOs, and how an SGO could operate across multiple states.
- Family eligibility: How SGOs can verify student income without creating unnecessary hurdles for families.
- Oversight and reporting: Audits, safeguards against duplicate awards, and how SGOs acknowledge and report donations so taxpayers can claim the credit.
- Schools served: Which schools qualify, including how state law affects the treatment of homeschools.
What we do not expect yet
This release is unlikely to settle the full list of qualified education expenses. Treasury has said additional guidance under Section 530, including more detail on tutoring and special needs services, will follow separately.
Where things stand
- The rules are under review at the White House’s regulatory office, a step that generally comes before publication.
- Public records show meetings with outside groups scheduled for Friday, Monday, and Tuesday.
- They also show two related rule packages under review:
- a proposed rule and an interim final rule.
- Neither text is public, so the records suggest a release is getting closer without establishing exactly when it will happen or what each package contains.
What to expect
We will review the rules when released, share the practical implications for states and SGOs, and identify where partner input during the comment process could help preserve a workable program for families.
