Over 30 states have formally joined the federal Education Freedom Tax Credit (EFTC). Not one has opened a process a scholarship organization can actually apply through. The reason is a sequencing decision at the Treasury Department, and it has quietly turned the last three months of 2026 into the most consequential stretch of the program’s first year.
Virginia’s entire contribution to the machinery of the EFTC, so far, is one letter.
On Jan. 9, 2026, then-Gov. Glenn Youngkin wrote to the Treasury Department and the IRS naming eight nonprofits as Virginia’s initial scholarship organizations, two based in the state and six national. He noted the list might change as federal guidance arrived.
Seven months later, that letter is still the only list of scholarship organizations any state has put in front of Treasury. Thirty states now appear on the IRS roster of participating states. Zero of them, Virginia included, have opened an application process an organization could actually apply through.
The yes votes are in. The plumbing is not connected yet. What changed this summer is that the connection date finally became legible.
What a State’s Opt-In Actually Did, and What It Didn’t
Start with the two steps people tend to blur together.
The first is the state election. A governor or a designated state official files a form with the IRS, and the state appears on the federal participation list. Kansas filed on July 7. Kentucky, which joined after its legislature overrode the governor’s veto, filed on July 22 and appeared on the IRS list on July 27, bringing the official count to 30. New York has announced it will participate without having elected in yet.
The second step is certification. Each participating state has to identify the nonprofits that may receive qualified contributions and award the scholarships. In plainer terms, a state has to say which scholarship-awarding charities count. The formal term for those organizations is Scholarship Granting Organization (SGO).
Only the first step exists in finished form. The election put states on the map; it did not switch the program on.
Why Every State Is Waiting on the Same Document
The hold is not confusion or delay at the state level. It is a sequencing choice at Treasury, and the states are unusually direct about it.
The IRS has fully built out the election filing. The rules governing SGO certification, who qualifies, how a state assembles and submits its list, and how first-year deadlines work, were deferred to proposed regulations. Treasury previewed that guidance on June 10, 2026, and said it expects to issue the rules no later than the end of September.
Until those rules land, states have no final criteria to certify against. So they are saying so, in writing, on their own pages.
Alabama’s Department of Revenue has gone furthest, publishing six criteria an organization must meet:
501(c)(3) status; scholarships to 10 or more students at more than one school; at least 90% of income spent on scholarships; no earmarking for named students; Alabama students only; and certification by the department itself.
Then the same page states that the department is “awaiting additional guidance from the Treasury Department” before finalizing deadlines.
Nebraska’s page says it will post SGO forms and procedures only “after the final federal guidance has been published.” Mississippi’s governor said the state would designate eligible organizations “in the coming months.” Tennessee has assigned its education department to certify organizations and submit the roster, but has not opened a window. West Virginia adjourned without designating an officer to run the list at all.
The pattern in every participating state is the same: authorized, staffed and waiting on one document.
Kentucky Moved First on the Part It Controlled
There is one exception worth understanding precisely, because it is easy to overstate.
On July 22, Secretary of State Michael Adams filed a regulation opening Kentucky’s SGO declaration process under the state’s own House Bill 1, alongside completing Kentucky’s federal election. That lets Kentucky nonprofits get in line under state law.
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It is not the same as federal qualification. The criteria every state will ultimately certify against still arrive with Treasury’s rules. Kentucky moved first on the piece it controlled, which is a real distinction, and a narrow one.
How Treasury’s Choice of Instrument Could Compress the Calendar
A late July signal changed the likely shape of the fall.
Treasury’s entries in the 2026 Unified Agenda list both §25F items as an interim final rule with accompanying temporary regulations. That kind of rule takes effect when it publishes, rather than after a comment period closes.
The stated purpose of the temporary rules is to let states submit their SGO lists in the fall of 2026, before final regulations publish. If that holds, certification opens on a faster track than a propose-then-comment cycle would allow.
Read that against the launch date and the calendar sharpens. States open applications, organizations apply and get listed, and each state files its roster with Treasury, most of it compressed into the fourth quarter.
The states that did early work, Alabama publishing criteria, Nebraska standing up an information page, Tennessee naming its certifying agency, are positioned to move quickest. The states still deciding who administers the list will be slower. As of publication, none of this is settled, and Treasury has not committed to a publication date.
Why This Matters to You, Even Though Nothing Is Open
Here is the part that gets lost in the certification story: none of this changes what a donor can do in 2026.
The federal credit under section 25F applies to the 2027 tax year. A gift made in 2026 does not earn it, even a gift to an organization a state has already named. That is a feature of the statute, not a consequence of the wait.
When the program begins on Jan. 1, 2027, the sequence runs in one direction. An eligible taxpayer first makes a charitable contribution to a certified scholarship granting organization. The dollar-for-dollar federal credit, up to $1,700, is claimed later, at filing, against federal income tax liability.
So the useful question for a family or a donor this fall is not “where do I give?” It is narrower and more answerable: has my state elected in, has it named who administers its list, and has it published criteria? Those three facts tell you how ready your state is for January. Our explainer on how states opt in walks through the mechanics, and why no state has certified SGOs yet covers the certification gap in more detail.
What to Watch Between Now and January 1
Three markers are worth tracking.
The first is Treasury’s rules, expected by the end of September 2026. That publication is the starting gun for certification in every opted-in state at once, and its legal form (interim final versus proposed) determines how fast states can act.
The second is the first state to open a true application round. That will be a genuine first, and it has not happened yet.
The third is the roster itself. Thirty states on the participation list and one list of named organizations is the current gap. How much of it closes by December is the story of the rest of this year.
Where the AFC Scholarship Fund Fits
The fund is preparing to serve donors and families in participating states when the program begins on January 1, 2027. Certification decisions belong to the states and to Treasury, not to us.
If you want to follow what your state does this fall, sign up for updates and find out more. The rules are still being written, and we will explain them as they arrive.
No. Section 25F provides a credit for the 2027 tax year, so a gift made in 2026 does not qualify, even if it goes to an organization a state has already named. The program begins Jan. 1, 2027.
As of late July 2026, no state has opened an application process an organization can apply through. Virginia is the only state to have submitted a list to Treasury, eight organizations named by letter on Jan. 9, 2026, without an application round. Kentucky opened a state-level declaration process under its own law on July 22, which is separate from federal qualification.
Treasury previewed forthcoming guidance on June 10, 2026, and said it expects to issue rules no later than the end of September 2026. As of publication, no date has been confirmed, and the 2026 Unified Agenda lists the items as an interim final rule with temporary regulations, which would take effect on publication.
Each participating state will identify the organizations eligible to receive qualified contributions, using criteria that arrive with Treasury's regulations. Until those lists exist, no organization can accurately be described as federally certified.
Several states, including Alabama, list a requirement that an organization spend at least 90% of its income on scholarships. The federal version of that test will be defined in Treasury's regulations, so the final mechanics are not settled yet.
