The Internal Revenue Service (IRS) and the U.S. Department of the Treasury are seeking public input on how to implement a new tax credit program established under the One Big Beautiful Bill Act (OBBBA), which aims to expand educational options for families and help students cover their schooling costs.
According to Newsweek, the program will offer a nonrefundable tax credit for any donations made to approved scholarship-granting organizations that support K–12 students from low- and middle-income families.
The initiative primarily focuses on funding private school tuition, in addition to a range of other educational expenses, while allowing each state to decide whether or not to participate.
IRS Education Tax Credit Rules
Starting January 1, 2027, taxpayers will be able to claim a credit of up to $1,700 per individual for cash donations to these organizations. States will be responsible for providing the IRS with lists of eligible entities before residents can begin claiming the credit.
The regulations require scholarship-granting organizations to be tax-exempt nonprofits—such as educational associations, universities, and churches—and allow them to retain up to 10% of the funds to cover administrative costs. The discussion also includes how to address organizations that operate across multiple states.
As a preliminary step, the IRS announced that it will soon issue proposed rules for the program, inviting the public to participate and submit comments through the Federal e-Rulemaking portal under code IRS-2025-0466 before December 26, 2025, as part of its effort to establish a clear and reliable framework for adopting and implementing the program across all U.S. states.