The U.S. Treasury Department previewed forthcoming guidance for the Education Freedom Tax Credit, a new federal scholarship program set to launch in January 2027, with Treasury Secretary Scott Bessent emphasizing the administration’s commitment to providing clarity to states, scholarship organizations, and taxpayers.
Treasury expects to issue proposed regulations by the end of September 2026, according to a press release issued June 10. States, scholarship-granting organizations, and taxpayers are expected to be able to rely on those proposed regulations for tax year 2027.
The Education Freedom Tax Credit allows individual taxpayers to claim a federal tax credit of up to $1,700 for cash contributions to scholarship-granting organizations (SGOs) that provide scholarships for K-12 education expenses. The credit is dollar-for-dollar, meaning a $1,700 donation reduces a taxpayer’s federal income tax liability by $1,700, subject to their overall tax liability.
States must opt in to participate in the program. Once a state chooses to participate, it provides the IRS with a list of eligible scholarship-granting organizations located within that state. The organizations on those lists can then receive qualified contributions from taxpayers and use the funds to provide scholarships to eligible students.
Treasury previewed the guidance during a roundtable with scholarship-granting organizations, education stakeholders, technology providers, state representatives, and other partners. Deputy Assistant Secretary for Tax Policy Kevin Salinger outlined several key issues in the forthcoming guidance. The program was enacted as part of the Working Families Tax Cuts legislation.
The credit is designed to expand educational opportunity by encouraging private contributions to scholarship-granting organizations and helping families access educational options that meet their children’s needs. Treasury and the IRS are developing the proposed regulations to provide states, scholarship-granting organizations, taxpayers, and other stakeholders with clear rules for implementation, compliance, reporting, and program integrity ahead of the credit’s expected 2027 launch.
Sources
- U.S. Department of the Treasury — Treasury previews Education Freedom Tax Credit guidance announcement and Treasury Secretary Scott Bessent statement on June 10, 2026
- U.S. Department of Education — Education Freedom Tax Credit fact sheet describing program mechanics and state participation
