Treasury and the IRS issued proposed rules October 1 for the federal scholarship tax credit under section 25F, along with temporary procedures for participating states and scholarship organizations. The program begins in 2027. The release describes an annual credit of up to $1,700 for qualifying individuals and a combined $3,400 for married couples filing jointly.
The credit concerns qualified cash contributions to eligible scholarship-granting organizations, not any school payment or donation. It is nonrefundable: the headline maximum should not be described as a guaranteed check even when a taxpayer gives that amount. The release also discusses proposed carryforward and ordering rules, which should remain distinguished from an individual's final tax treatment.
States elect to participate and identify qualifying organizations. The IRS says taxpayers can support an eligible organization outside their home state, but the organization must satisfy statutory requirements and appear on the relevant list. Treasury's projections for donors, scholarships and student eligibility are estimates under its proposed framework, not scholarships already awarded.
Before budgeting around the credit, check the contribution year, organization eligibility, acknowledgment requirements and the difference between a donor's credit and a student's scholarship. The new temporary rules help states and organizations prepare; they do not turn an ordinary 2026 contribution into a 2027 benefit. The October announcement is implementation news, not permission to treat private tuition as fully reimbursed or to assume every family receives the maximum.