TL;DR

  • A state participates in EFTC when it elects and submits a list of qualifying Scholarship Granting Organizations to the IRS. For 2027, Treasury’s temporary regulations require an advance election on Form 15714 by January 1, 2027 and the SGO list by February 15, 2027. From 2028 on, lists are due by January 1 each year.
  • States can opt in via an executive action by the governor, a legislative bill, or a combination. The election is made by the governor or whoever state law designates, filed through an IRS State section 25F portal.
  • Participation is annual: each election covers one calendar year and can’t be revoked once completed. A veto in one year doesn’t permanently foreclose future participation.
  • A participating state must list every qualifying organization that seeks inclusion and may not impose rules on SGOs stricter than federal law.
  • If a state doesn’t opt in, families who live there cannot access EFTC scholarships, even though donors in that state can still claim the federal credit by giving to an SGO in a participating state.
  • Citizen advocacy meaningfully influences the decision. Governors face political pressure from both directions; constituent voice counts.

The opt-in mechanism

EFTC, the federal program also known as the Federal Scholarship Tax Credit (FSTC) and codified at IRC §25F, requires state action to deliver benefits to families in any given state. The federal trigger is narrow but specific: by January 1 of each calendar year, a participating state’s governor (or whoever state law designates to make elections on federal tax benefits) must provide a list of Scholarship Granting Organizations (SGOs) located in that state that meet EFTC’s federal requirements. For the first year, the statute says only “as early as practicable.” Treasury’s temporary regulations (T.D. 10057), released October 1, 2026 and applying from September 1, 2026, fill in the rest: the election and the list go to the IRS, the 2027 list is due February 15, 2027, and an organization is “located in” a state if it is authorized to do business there and complies with the state’s charity laws. No in-state headquarters is required.

Without that submission, no organization in the state qualifies as an SGO, no donations from federal taxpayers (whether residents or not) flow into scholarships for the state’s students, and EFTC effectively does not operate in that state for the year. Thirty states had elected for 2027 as of August 2026, by Treasury’s count; because every 2027 election starts as a Form 15714 advance election, each of them still has to complete it by submitting its SGO list by February 15, 2027.

The IRS State section 25F portal

A participating state registers in a new IRS State section 25F portal using a special-purpose EIN the IRS assigns or tells it how to obtain. The governor, or whoever state law designates, may authorize up to two designated officials to use the portal, and each must be an elected official, the Director of Taxation, or an appointed official. The election, the SGO list, later changes to the list, and annual certifications all go through it. The portal is not open yet, and Treasury says the IRS is considering temporary alternative procedures for the first year so that every state that wants in can file.

The advance election (Form 15714)

In December 2025 the IRS added a way for states to lock in their participation early. Under Revenue Procedure 2026-6, a state can make an “advance election” to be a covered State for 2027 by filing IRS Form 15714, which could be filed starting January 1, 2026. Rev. Proc. 2026-6 is the exclusive method for 2027: no alternative filing and no altered version of the form will be accepted. Treasury’s temporary regulations now set the cutoff: for 2027, a state must submit its advance election on Form 15714 “on or before January 1, 2027.” A state electing for the first time cannot elect just by sending a list; the advance election has to come first.

The advance election is a signal, not a substitute. It tells donors and SGOs that a state intends to participate, but the state must still perfect it by submitting its list of qualifying SGOs, and for 2027 that list is due on or before February 15, 2027. If a state files Form 15714 and never sends the list, “no organization in that State would qualify as an SGO” for the year. Once the list is in and the election is complete, Treasury says it can’t be revoked for that year. The IRS will publish the list of states that have made advance elections. This two-step structure is why a state can be reported as “announced intent” before it is formally certified, the advance election comes first, the SGO list second.

Why it matters for timelines: the advance election lets a governor commit before the political calendar forces the issue, giving SGOs and donors in the state certainty ahead of the program’s January 1, 2027 launch. For 2028 and later, the temporary regulations set a repeating calendar: a state that has elected before files its advance election through the portal between January 2 and September 30 of the prior year, then perfects it with its list between October 1 and January 1. It can also skip the advance step and elect by submitting its list in that October-to-January window. “On or before January 1” runs to 11:59 p.m. that day, so a newly inaugurated governor can act. A state electing for the first time after 2027 follows procedures the IRS will issue.

Two paths: executive vs. legislative

The executive path

In some states, the governor acts unilaterally (or with support from existing state agencies) to opt in. They file the election, set up a process for reviewing the organizations that apply, and submit the list to the IRS. No new state law is required: §25F itself lets the governor make the election, and the governor’s role is to act as the state’s federal counterparty.

The legislative path

In other states, the legislature passes a bill that establishes a state-level framework for EFTC participation: who makes the election, how SGOs apply, what documentation and financial reports they file. The governor then signs or vetoes the bill. A statute can hand the election to someone other than the governor; Tennessee’s directs its Department of Education to make it. In that case the state must give the IRS the enacted law that establishes the authority. What a state law cannot do, under Treasury’s temporary regulations, is add conditions that make SGOs operate more restrictively than §25F (more on that below).

Both paths can lead to participation. They can also collide: in several states, legislatures have passed opt-in bills that governors have vetoed, leaving the state in a pending or contested status.

What the governor (or designee) certifies

When a state submits its SGO list, the governor or a designated official certifies, under Treasury’s temporary regulations:

  • That whoever made the election has the authority to make it (with the enabling state law attached if it isn’t the governor)
  • That the list includes every organization located in the state that seeks inclusion and meets the federal requirements
  • For each SGO: that it is located in the state, is a 501(c)(3) public charity (or has an application pending, see below), and keeps a separate §25F account holding only qualified contributions and their earnings, with complete books
  • For each SGO: that it meets the operating requirements, including the 90% spending test, income and eligibility verification, and the bar on earmarking gifts for a particular student
  • For each SGO: whether it is single-state or multistate, and that the state reviewed its annual audit and IRS certifications (once it has filed them) and followed up on any failures
  • That the state’s procedures let it make those determinations, remove a non-qualifying SGO promptly with due process, and keep any public list identical to the one sent to the IRS, with a link to the IRS SGO list
  • A description of any state tax credit available for contributions to SGOs that year

States do not have discretion to narrow the field. A state “may not require SGOs to operate in a manner that is more restrictive than” the federal requirements, “such as by limiting the type of school that scholarship recipients may attend or the types of qualified elementary or secondary education expenses for which scholarship funds may be used.” What a state must do is require SGOs to follow its general charity laws, and it must require applications, documentation, and financial reporting reasonably tailored to the federal tests and to preventing fraud, including duplicate awards. State procedures are subject to federal review, and after a pattern of irregularities the IRS may require a state to change them. More in one national standard for SGOs.

New organizations and pending exemptions

Most SGOs on a 2027 list will have no track record to show. Until an organization has filed its first annual certification and audit, the state may rely on its governing documents, written policies and procedures, and other documentation, but only after determining that they expressly require (beyond a general promise to follow the law) the federal operating requirements and show the ability and intent to meet them. A state may also list organizations whose 501(c)(3) applications are still pending, but only if it lists every pending applicant that seeks inclusion, reviews each under that same transition rule, marks them as pending, and certifies that each exemption, if granted, will take effect on or before January 1 of the list year. In practice, an organization aiming at a 2027 list should be formed by January 1, 2027, and apply for exemption on time so the exemption reaches back to formation. See the February 15 calendar and the free SGO Builder.

Changes and removals

A state may add to or replace its list until the year’s deadline; later additions wait for the next year’s list. It may remove an SGO only through a procedure that gives the organization due process, on a finding that it isn’t located in the state or doesn’t meet the requirements, and it must honor an SGO’s own request to be removed. Each removal is reported to the IRS, which shows removed SGOs struck through, with the date, on the IRS SGO list. A multistate SGO removed by one state stays listed for the others where it still qualifies.

The annual cycle

  1. Throughout the year: SGOs operate, raise funds, and award scholarships. State authorities monitor compliance.
  2. January 2 to September 30: A state that has elected before may file its advance election for the next year through the IRS State section 25F portal. (For 2027 only, the advance election is Form 15714, due by January 1, 2027.)
  3. Fall: The governor’s office (or designated state agency) reviews the organizations that apply for the following year’s list, using the application, documentation, and financial-reporting requirements the state has set within the federal limits.
  4. October 1 to January 1: The state submits the next year’s SGO list to the IRS, perfecting its advance election or electing with the list itself. For 2027 only, the list is due by February 15, 2027. States that miss the applicable deadline are not participating that year, and a state that filed an advance election but never sends its list has no qualifying SGOs.
  5. January through December: Donations to listed SGOs qualify for the federal tax credit, and donors may rely on an organization’s presence on the IRS SGO list at the time of the gift. The state may remove SGOs during the year (with due process) but can’t add new ones after the deadline.
  6. The following year: SGOs send donor acknowledgments by January 31 and report donor totals to the IRS by February 28. Under Treasury’s proposed rules they also file an annual certification and an annual audit, with copies to each listing state, which reviews them before listing the SGO again.
The annual nature is significant. A state that doesn’t opt in this year can opt in next year. Conversely, a state that opts in this year could decline to renew next year, though it can’t revoke a completed election partway through a year. The political battle isn’t one-and-done.

Vetoes and overrides

Several governors have vetoed legislative opt-in bills. The consequences depend on what happens next:

  • Veto stands: The bill dies. The state does not participate unless the governor changes their mind or the legislature acts again.
  • Veto overridden: Most states require a supermajority to override (typically two-thirds in each chamber). When that happens, the state participates regardless of the governor’s objection. North Carolina, Kansas, and Kentucky entered this way. The temporary regulations accommodate it: an election may be made by whoever state law designates, and the state documents that authority by giving the IRS the enacted law.
  • Reversal in a future year: A governor who vetoed one year may elect in a later one, particularly if political conditions change. A state electing for the first time after 2027 follows advance-election procedures the IRS has said it will issue.

What happens if a state doesn’t opt in

Several practical consequences follow:

  • Families in the state can’t access EFTC scholarships. No qualifying SGOs means no federal scholarship funding for K-12 students who live in the state. Under Treasury’s proposed rules a scholarship follows the student’s residence, so attending school in a participating state doesn’t help (narrow exceptions cover military and Tribal families).
  • Donors in the state can still claim the federal credit by giving to SGOs in opted-in states. Their donations fund students elsewhere. See when a state opts out, the money leaves.
  • The state forfeits scholarship money that would otherwise have flowed to its families, without affecting state-budget priorities, since EFTC is purely federal.
  • The state can revisit the decision in any subsequent year.

How citizens can advocate

The decision is political, and for 2027 it has a hard date: under the temporary regulations, a state that hasn’t filed Form 15714 by January 1, 2027 can’t participate in 2027. Citizens can influence it:

  • Contact the governor’s office directly. Phone calls and emails are tracked; they signal constituent priority.
  • Engage state legislators. They can introduce or advance opt-in legislation, override vetoes, and apply political pressure.
  • Public testimony at hearings. Personal stories from parents, teachers, and students carry weight in legislative decisions.
  • Op-eds and letters to the editor. Local media shapes how governors perceive constituent sentiment.
  • Coordinated advocacy. Education-choice organizations, parent groups, religious institutions, and community groups can amplify individual voices.

Want to see your state’s status and your governor’s position? Visit the state-by-state status map.

Frequently asked questions

Who decides whether a state opts in to EFTC?

The governor, or whoever state law designates to make elections on federal tax benefits. Under Treasury's temporary regulations (T.D. 10057), which apply from September 1, 2026, the election and the state's list of qualifying Scholarship Granting Organizations go to the IRS through an IRS State section 25F portal. If someone other than the governor makes the election, the state must give the IRS the enacted law that grants that authority. In some states the legislature has decided it: North Carolina, Kansas, and Kentucky entered when their legislatures enacted opt-in laws over the governor's veto, and Tennessee's law directs its Department of Education to make the election.

When is the deadline for a state to opt in?

For 2027, a state must file its advance election on Form 15714 on or before January 1, 2027, then complete it by submitting its SGO list on or before February 15, 2027. A state electing for the first time can't do it just by sending a list; the advance election has to come first. For 2028 and later, a state files its advance election between January 2 and September 30 of the year before and submits its list between October 1 and January 1 (up to 11:59 p.m. on January 1), or elects by submitting its list in that October-to-January window. A state electing for the first time after 2027 follows procedures the IRS will issue. These dates are in Treasury's temporary regulations.

What is the advance election and Form 15714?

IRS Revenue Procedure 2026-6 (December 2025) created Form 15714, Advance Election to Participate Under Section 25F for 2027. Treasury's temporary regulations make it the required first step for 2027: a state files it on or before January 1, 2027, then perfects it by submitting its list of qualifying SGOs by February 15, 2027. If the list never arrives, no organization in that state qualifies as an SGO for 2027. The IRS will publish the list of states that have made advance elections.

Can a state opt in for one year and not the next?

Yes. Each election covers a single calendar year, and a new governor or a change in policy can put a state in or out for any given year. But Treasury says a completed election, including a perfected advance election, can't be revoked for that year. A state that wants out simply doesn't complete the next year's election.

Can a state choose which SGOs go on its list?

No. Under the temporary regulations, the state must certify that its list includes every organization located in the state that seeks inclusion and meets the federal requirements. It may not require SGOs to operate more restrictively than §25F, such as by limiting the type of school students may attend or the expenses scholarships may cover. It can remove an SGO only through a procedure that gives the organization due process, and an SGO that asks to be removed must be. State procedures are subject to federal review.

What if my governor vetoes an opt-in bill?

If the legislature passes an opt-in bill and the governor vetoes it, the state does not participate unless the legislature overrides the veto (which typically requires a supermajority) or the governor reverses course in a future year. When an override puts a state in, the law can name who makes the election; the temporary regulations accept an election by whoever state law designates, as long as the state documents that authority.

Can citizens influence the decision?

Yes. The decision is political and visible. Direct outreach to the governor's office, public testimony, op-eds, coordinated advocacy through education and parent organizations, and constituent meetings with state legislators all factor into how governors and legislatures decide.