Federal Register #2026-20277

IRS Proposed Regulations for the Federal Scholarship Tax Credit

The U.S. Department of the Treasury’s Internal Revenue Service (IRS) is proposing rules for a federal tax credit supporting K–12 scholarships. - Government buyer: U.S. Department of the Treasury, Internal Revenue Service (IRS); no sub-agency or office is specified. - Opportunity type: Proposed tax regulations and public hearing notice, not a procurement or contract award. - Program: A nonrefundable federal tax credit for qualified cash contributions by individuals to scholarship granting organizations (SGOs) funding elementary and secondary education scholarships. The credit is limited to $1,700 per taxpayer, with provisions for carrying forward unused credits. - Notable SGO requirements: Maintain a segregated account for qualified contributions; spend at least 90 percent of income on scholarships; serve at least 10 students who do not all attend the same school; verify student eligibility and qualified expenses; apply preferences for certain returning students and siblings; and avoid earmarking contributions for a particular student. The proposed rules also discuss an operational safe harbor for certain single-State SGOs. - Other matters covered: Taxpayer eligibility and credit calculations, State participation and certification of SGOs, SGO qualification and operations, and related reporting and recordkeeping. The notice invites public comments and announces a hearing. - OEMs, vendors, products, and quantities: None identified; no products or services are being procured.

Description

The IRS proposes regulations for the nonrefundable federal tax credit for qualified cash contributions to scholarship granting organizations that fund scholarships for elementary and secondary education. The proposed rules address taxpayers claiming the credit, state participation and certification of scholarship granting organizations, and requirements for those organizations, including operational, reporting, and recordkeeping requirements. The notice also announces a public hearing scheduled for December 15, 2026. Comments and requests to speak are due December 1, 2026.

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