Treasury previews guidance on new scholarship tax credit

Treasury last week previewed guidance expected to be released this fall on the new federal scholarship tax credit enacted as part of the One Big Beautiful Bill Act.

The upcoming guidance will provide states, scholarship-granting organizations, taxpayers and other stakeholders with information before the launch of the Education Freedom Tax Credit in January 2027. Treasury and the IRS expect to issue proposed regulations by the end of September.

The new scholarship tax credit under Section 25F of the Internal Revenue Code is intended to expand educational opportunity by encouraging private contributions to scholarship-granting organizations.

The program — a part of President Donald Trump’s tax-and-spending legislation that Congress passed last summer — offers taxpayers dollar-for-dollar tax credits of up to $1,700 for donations to organizations that award K-12 scholarships.

Those scholarships can cover private school tuition, homeschooling costs in some states and some expenses for public school students. Read more.