WASHINGTON, D.C. — The U.S. Department of the Treasury issued a preview of guidance for the Education Freedom Tax Credit scholarship program on June 10, 2026. This guidance outlines key regulatory policies regarding donor credits, scholarship eligibility, and oversight for scholarship-granting organizations.

President Donald Trump enacted the tax credit as part of the One Big Beautiful Bill Act, which mandates the Treasury Department to create implementing regulations. The program is set to become effective on January 1, 2027. Deputy Assistant Secretary for Tax Policy Kevin Salinger stated that the Treasury plans to propose regulations concerning the program in September.

The Education Freedom Tax Credit is a nonrefundable tax credit that allows individuals to receive federal tax credits for donations, up to $1,700, to authorized scholarship-granting organizations. The U.S. Department of the Treasury clarified that it will define "school" to include public schools, private schools, and homeschools in states that recognize them under state law. Scholarship-granting organizations distribute these funds to eligible families for educational expenses, including private school tuition and tutoring services.

To qualify for scholarships, students must reside in households earning no more than 300% of the area's median gross income and be eligible for K-12 enrollment. The Treasury stated that scholarship-granting organizations will be required to verify student household income through methods such as paystubs, tax returns, IRS transcripts, W-2 forms, and commercial data sources. Organizations can categorically verify eligibility for families already receiving federal need-based aid and for foster students.

Participating states must submit a list of authorized scholarship-granting organizations for taxpayers to donate to in order to receive the federal tax credit. Students in non-participating states cannot receive scholarships under this program. Donors in non-participating states can still receive a federal tax credit by donating to scholarship-granting organizations located in participating states. The Treasury stated it expects the proposed rules to measure the 90-percent spending requirement against an organization's total receipts, unreduced by expenses. For multi-state organizations, a safe harbor for measuring income would require separate satisfaction for each state-specific segregated account.

The Treasury preview indicated that the regulations would permit multi-state scholarship-granting organizations to participate, likely by requiring separate donation accounts for each state. The department also stated that participating scholarship-granting organizations will undergo annual audits. Smaller organizations may obtain audits from an internal committee unrelated to management, while larger organizations will require third-party audits.

As of June 15, 2026, 31 U.S. states have either opted into the program or indicated plans to participate. Governor Tina Kotek of Oregon stated on June 12, 2026, that Oregon would not participate in the program. Minnesota Governor Tim Walz said in March 2026 that Minnesota would not participate. The legislatures in Kansas, Kentucky, and North Carolina overrode gubernatorial vetoes of bills requiring state participation in the program. Alaska and Nevada formally opted into the program.

No independent assessment was available for this report.