In November 2025, the IRS issued Notice 2025-70 requesting public comment on implementation of the new §25F Federal Scholarship Tax Credit (FSTC), signaling the start of formal rulemaking ahead of the program's January 2027 launch.
Update, October 1, 2026: the proposed regulations that followed this notice answer the donor questions above. Spouses filing jointly are treated as separate taxpayers, so a couple can claim up to $3,400 when each spouse gives $1,700; the credit is allowed against both regular tax and the alternative minimum tax; and donors will claim it on Form 8525, which the IRS has not yet released. Taxpayers may rely on the proposed rules for 2027 contributions. Our read of the rules.
In November 2025, the Internal Revenue Service issued Notice 2025-70, requesting public comment on the implementation of the new Federal Scholarship Tax Credit (FSTC), codified at IRC §25F, the federal credit created by the Educational Choice for Children Act (ECCA) and enacted as Section 70411 of the One Big Beautiful Bill Act (P.L. 119-21).
The notice signals the start of formal rulemaking. Treasury and the IRS announced they intend to issue forthcoming proposed regulations, and Notice 2025-70 specifically asks for input on issues including the annual state certification process for participating in the program, the requirements that Scholarship Granting Organizations (SGOs) must meet, donor substantiation, and verification of household income for eligible students.
For donors and families, the practical takeaway is that key implementation details, including final guidance on whether married filers jointly receive a single $1,700 cap or $3,400, AMT coordination, and the specific IRS form donors will use to claim the credit, remain to be issued. Comments submitted in response to Notice 2025-70 are expected to shape the proposed regulations Treasury publishes ahead of the program's January 1, 2027 launch.
The comment window closed on December 26, 2025, and Treasury and the IRS received more than 2,200 public comments, a sign of how much is at stake in the rulemaking and how contested some of the design choices are. As of early 2026, Treasury and the IRS were reviewing those comments while developing the proposed regulations.
Tax practitioners and SGO operators are watching IRS rulemaking closely. The structure of the proposed regulations will determine how donors document contributions, how SGOs verify eligibility, and how states certify participation each year.
