A Major Step Forward: Treasury and IRS Request for Comment on the New Federal Scholarship Tax Credit
Washington announced a long-awaited update for the national school choice community. The Department of the Treasury and the IRS released Notice 2025-70, officially opening the public comment period for the new federal tax credit established under the One, Big, Beautiful Bill.
This is the earliest look at how the federal government plans to implement what will become one of the most transformative funding opportunities for students across the country.
What the Notice Confirms
Beginning January 1, 2027, individual taxpayers will be able to claim a nonrefundable federal tax credit of up to $1,700 for cash contributions made to qualified Scholarship Granting Organizations (SGOs). These scholarships are specifically intended for elementary and secondary students from low- and middle-income families.
This is a national version of what many states have done for years with programs like EITC, EDS, and other state-level credits, but for the first time ever, it is available to taxpayers in every participating state.
What Treasury and IRS Are Asking For
Notice 2025-70 signals that full proposed regulations are coming, but federal agencies are actively seeking input now. They want comments on:
• How States will certify SGOs
Every participating State must annually verify which organizations meet the statutory definition of an SGO. The IRS is requesting feedback on what this certification should look like and how it can be done accurately.
• The policies and procedures States must use
States need a reliable system to ensure the SGOs they list are operating within legal guidelines. The Notice asks for input on what processes should be required or encouraged.
• How to handle multi-state or unique SGO structures
Some organizations operate only in one state. Others fundraise nationally and award scholarships regionally. The IRS wants to understand these realities to avoid excluding legitimate organizations inadvertently.
• Recordkeeping and reporting for SGOs
Transparency and accountability will be essential. The IRS is seeking comment on what reporting requirements will ensure compliance without overburdening the organizations doing the work.
Why This Matters
For the first time, there will be a federal mechanism for families across the nation to support scholarship opportunities for K-12 students. The potential impact is enormous:
- More scholarship dollars for low- and middle-income families
- Greater access to educational choice
- Increased opportunity for schools to expand programming
- National-level support for private and non-public education models
But the details matter, and the rulemaking over the next year will determine how seamless or complicated the rollout becomes.
How to Submit Comments
If you want to contribute to shaping this program, comments must be submitted by December 26, 2025:
Electronically: Use the Federal e-Rulemaking Portal and reference IRS-2025-0466
By Mail:
Internal Revenue Service
CC:PA:01:PR (Notice 2025-70)
Room 5503, P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
What Comes Next
The Treasury and IRS intend to issue proposed regulations after reviewing public comments. These rules will outline how SGOs, states, schools, and donors interact with the new federal credit.
This is the start of the most significant national expansion of educational choice in decades. States, schools, and SGOs that prepare now will be ready to capture the full benefit when 2027 arrives.
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