On October 1, the IRS released an interim rule and a proposed rule creating operational guidelines for the Federal Scholarship Tax Credit (FSTC) established by the One Big Beautiful Bill Act. The FSTC provides a tax credit for contributions made to scholarship granting organizations (SGO) for qualified K-12 education expenses, and the United States Treasury Department estimates that $26 billion will be contributed annually by 2030. States and SGOs were advised to use the regulations to prepare for the program’s launch in 2027. The rules state that:
- States cannot add SGO operating restrictions beyond federal law.
- Participating states must submit SGO lists by February 15, 2027.
- SGOs must spend at least 90 percent of income on education scholarships.
Public comments for the proposed rule are due December 1.
