Treasury Department Releases Temporary Rules for Federal Scholarship Tax Credit, Effective 2027

The U.S. Department of the Treasury and the IRS have published temporary regulations for the Federal Scholarship Tax Credit (FSTC), enacted by the One Big Beautiful Bill Act, which takes effect on January 1, 2027. This credit allows taxpayers to redirect up to $1,700 of their federal tax liability per person to Scholarship Granting Organizations (SGOs) serving K-12 students. As of October 2026, 31 states have opted into the program, which is designed to offset individual contributions to scholarship programs for public and private school students.