A federal tax credit exists on paper. The rules that will make it work in practice are still being written, and in late 2025 the IRS asked the public to help write them.
A Law Without Instructions
In November 2025, the Internal Revenue Service published a five-page notice asking a question that sounds almost unusual coming from a tax agency: how should we run this?
The notice, numbered 2025-70, concerned the new Education Freedom Tax Credit (EFTC) written into law on July 4, 2025. It invited anyone (accountants, nonprofit directors, parents, state officials) to submit comments on how the credit should work. The comment window closed December 26, 2025. By then, Treasury and the IRS had received more than 2,200 responses.
Here is the short version for anyone who just wants the answer: the EFTC is law, but the rules that govern how donors claim it and how scholarship organizations qualify have not been finalized. Notice 2025-70 started that process. Proposed regulations are expected before the program’s January 1, 2027 start date.
What the Credit Does, in Plain Terms
Start with the mechanics, because the rulemaking only matters if you understand what it governs.
Beginning January 1, 2027, an eligible taxpayer may make a charitable contribution to a nonprofit that awards K-12 scholarships. The formal name for that kind of nonprofit is a Scholarship Granting Organization (SGO). Later, when the donor files a federal return, they may claim a dollar-for-dollar federal tax credit of up to $1,700.
The order matters. The gift comes first. The credit is claimed afterward, at filing. It is not a redirection of taxes already owed, and it is not a refund.
The credit lives in the tax code at Section 25F, added by Section 70411 of the One Big Beautiful Bill Act. You may also see it called the Federal Scholarship Tax Credit or the Educational Choice for Children Act. Those names all describe the same program.
The Four Questions the IRS Put on the Table
Notice 2025-70 did not announce decisions. It asked for input, and the topics it named tell you where the real uncertainty sits.
The notice sought comment on the annual process by which states certify their participation, the requirements a SGO must meet to qualify, how donors will substantiate their contributions and how a student’s household income will be verified.
Read that list again and you can see the whole program in it. One item decides which states are in. One decides which nonprofits can accept qualified contributions. One decides what paperwork a donor keeps. One decides which children are eligible.
The Detail Married Couples Are Waiting On
Among the open questions, one has drawn unusual attention from tax practitioners: whether a married couple filing jointly receives a single $1,700 cap or $3,400.
As of publication, that has not been settled in published guidance. Anyone telling you otherwise is guessing.
Two other technical items remain open as well. How the credit coordinates with the alternative minimum tax, a parallel calculation that limits certain tax benefits for some higher-income filers. And which IRS form donors will actually use to claim the credit.
None of these are small. They determine what a household can plan for.
Be the First to Know
Get notified when the Education Freedom Tax Credit launches so you don’t miss the opportunity to support K–12 students while benefiting from a federal tax credit.
Why 2,200 Comments Is a Signal, Not Just a Number
Public comment periods on technical tax guidance often draw a few dozen letters. This one drew more than 2,200.
That volume tells you two things. The program has a wide audience, including accountants, state agencies, nonprofit operators and families. And several of its design choices are genuinely contested.
Consider the definition of a qualifying scholarship organization. Write the certification standards tightly and fewer nonprofits qualify, which may mean fewer scholarships in rural or low-population states. Write them loosely and oversight questions follow. Reasonable people submitted comments on both sides.
The same tension runs through household income verification. Stricter documentation protects the program’s integrity. It also adds paperwork for families who may already be managing more than enough of it.
How This Fits the Larger Timeline
It helps to keep five separate dates apart, because they are routinely blurred together.
The law took effect July 4, 2025. Federal rulemaking began with Notice 2025-70 in November 2025. Proposed regulations are expected during 2026. Donations that may qualify for the credit begin January 1, 2027. Donors would claim the credit on the return filed for the 2027 tax year, in 2028.
State participation runs on its own track alongside all of that. A state must make an election to take part, and states are still deciding. We track that separately in our state opt-in explainer.
What This Means If You Plan to Give
The practical takeaway is patience with a purpose.
If you are an eligible taxpayer thinking about a qualified contribution in 2027, nothing you need to do is urgent today. Donations cannot be made under this credit before January 1, 2027, and the forms do not yet exist.
What you can do is understand the shape of the thing. Know that this is a credit and not a deduction, which means it reduces federal income tax liability dollar for dollar rather than reducing taxable income. Know that the credit is non-refundable, so it applies against tax you owe. Know that the $1,700 figure and the joint-filer question are both subject to final Treasury regulations.
If you work with a certified public accountant, the rulemaking is worth a conversation later in 2026, once proposed regulations are published. That is when the planning questions become answerable instead of hypothetical.
What to Watch Next
Three things.
First, publication of proposed regulations by Treasury and the IRS, which is expected during 2026 and will likely open a second comment period of its own. Second, the release of the donor claim form and the state certification process, which turn policy into paperwork. Third, the growing list of states that have made or declined the election.
Until then, the honest description of where things stand is this: the credit is law, the rules are pending, and the people writing them asked to hear from the public first.
It is a notice the IRS issued in November 2025 requesting public comment on how to implement the federal scholarship tax credit at Section 25F. It marked the start of formal rulemaking and named specific open questions, including state certification, requirements for Scholarship Granting Organizations, donor substantiation and household income verification.
No. As of publication, contributions eligible for this credit cannot be made before January 1, 2027, and the IRS has not published the form donors will use. Final Treasury regulations are still pending.
That has not been resolved in published guidance. Notice 2025-70 identified it as an open implementation question, and the answer is expected to come through Treasury's proposed and final regulations.
No. The comment window on Notice 2025-70 closed December 26, 2025. Treasury and the IRS are reviewing the responses while developing proposed regulations, and a new comment period typically accompanies proposed regulations when they are published.
Yes. A state must make an election to take part in the program, and the annual certification process is one of the items the IRS asked the public to comment on. Whether donors and families in a given state can participate depends on that state's decision.
