On October 2, 2026, the Treasury Department and the IRS published proposed regulations for Section 25F, the new federal scholarship tax credit created by the One Big Beautiful Bill Act. The rules fill in many details the law left open. Here is what matters most for donors and families.
For donors
- Married couples can claim up to $3,400. Spouses filing jointly are treated as two taxpayers, so each spouse can claim up to $1,700 for their own qualified donation.
- You will get a unique donor number. Scholarship Granting Organizations must send each donor a written acknowledgement with a unique donor number by January 31 of the following year, and report donors to the IRS.
- Business gifts do not count. A partner or S corporation shareholder cannot claim a share of the business's donation.
- State credits reduce the federal credit when they are claimed for the same qualified donations.
For families
- Income limit: 300% of area median gross income, measured the same way as for the low-income housing tax credit and adjusted for household size. The IRS plans to publish limits by area each year. Estimate your limit.
- Annual verification: household income is checked for the calendar year before the application.
- Priority: students who received a scholarship the prior year come first, then their siblings.
For Scholarship Granting Organizations
- Qualified donations must be kept in a separate, segregated account.
- At least 90% of income must be spent on scholarships by the end of the following year, measured on a cash basis.
- Scholarships cannot be earmarked for a particular student.
What happens next
Written comments are due December 1, 2026, and a public hearing is scheduled for December 15, 2026. The rules are proposed, so details could change before they are final. Donations made on or after January 1, 2027 can qualify for the credit.
General information, not tax advice. Based on the law and proposed regulations, which may change.