The Internal Revenue Service filed two documents today, both titled "Federal Scholarship Tax Credit" and both scheduled to be published in the Federal Register on October 2, 2026: a 61-page rule of temporary regulations (FR Doc. 2026-20264, TD 10057) and a 181-page proposed rule (FR Doc. 2026-20277, REG-117199-25), both on a new federal tax credit for gifts to certified scholarship charities.
What the credit is
New Internal Revenue Code section 25F, added by the One, Big, Beautiful Bill Act (Public Law 119-21, July 4, 2025), allows a nonrefundable credit to a U.S. citizen or resident who makes a cash "qualified contribution" to a certified "scholarship granting organization," or SGO. The statute caps the credit at $1,700 a year per taxpayer and lets unused credit carry forward through the fifth taxable year after it arose. Section 25F applies to taxable years ending after December 31, 2026, and the temporary regulations say contributions may begin January 1, 2027.
What the temporary regulations settle
The temporary regulations (TD 10057) cover the machinery: definitions, two mandatory IRS portals (one for states, one for SGOs), how a state elects to participate and certifies its list of SGOs, and two reporting deadlines. An SGO must send each donor a written acknowledgment by January 31 of the following year and report the same contributions to the IRS by February 28. The Treasury Department and the IRS found "good cause" under the Administrative Procedure Act to issue them without advance notice and comment, saying the state and SGO paperwork must be in place before January 1, 2027. Their text is identical to parts of the proposal, so even this part is open to comment. They expire October 1, 2029.
What is still only proposed
The proposal carries the rules on who can claim the credit. None is final. It would set the credit at the lesser of $1,700 or qualified contributions reduced by state credits — the reduction first, the cap second. It would treat spouses filing a joint return as separate taxpayers, so a couple who each gave at least $1,700 could claim $3,400 on one return. A taxpayer would substantiate it on Form 8525 with a unique donor number the SGO supplies. Under section 25F an SGO must be a tax-exempt 501(c)(3) that is not a private foundation, hold qualified contributions in a segregated account, serve 10 or more students who do not all attend the same school, spend at least 90 percent of its income on scholarships, and appear on an electing state's list; the proposal would define the 300 percent of area median gross income limit on a recipient's household by section 8 of the United States Housing Act of 1937.
The dates
- Comments: the proposal sets no fixed date — comments and hearing outlines are due 60 days after publication. By this desk's count that is December 1, 2026, a Tuesday, so no weekend rule moves it, provided publication happens October 2.
- Public hearing: Tuesday December 15, 2026, 10 a.m. Eastern; requests to attend are due 5 p.m. Eastern on December 10, 2026. Both dates are printed in the document; the hearing is cancelled if no outlines arrive.
- Temporary regulations: effective 60 days after publication, per the document's own DATES line; applicable on or after September 1, 2026.