June 15, 2026
Written by Sasha Pudelski, Director, Advocacy at AASA, The School Superintendents Association and member of the AESA advocacy team
The U.S. Department of Treasury held an event where they previewed forthcoming Treasury and IRS guidance for the implementation of the new federal scholarship tax credit program created in the One Big Beautiful Bill Act. Of note, they said not to expect the proposed regulations before September. Given an expected 30–45 day comment period followed by OMB review, final regulations may not be issued until December.
Here is a brief summary of how Treasury is proposing to address key aspects of the SGO program not specified in the statute:
- 90% spending requirement: this would be measured against total receipts, not net of expenses. Safe harbor: if the SGO's activities are primarily scholarship-granting, it can measure the 90% against funds held in a segregated Section 25F account. Multistate SGOs must satisfy this separately per state.
What this means for public schools partnering with an SGO: This will limit the ability of districts to rely upon existing foundations that collect donations for the c3 to be used as the SGO. Specifically, in order to get around the 90/10 rule, the SGO would have to primarily collect and distribute scholarships and would then be eligible to use additional donations to support the infrastructure of the c3. - School definition: consistent with Section 530; includes public, private, religious, K–12. Home schools qualify if treated as schools under state law. Tribal schools expressly included.
What this means for public school: If you are in a state that defines homeschooling as a form of private schooling rather than creating a distinct "homeschooling" statute, homeschooling students would be able to get scholarships. Only 14 States define private school as homeschool: Alabama, California, Connecticut, Idaho, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Nebraska, New Jersey, Oklahoma, South Dakota, and Texas. - Defining eligible expenses: Treasury will issue separate guidance after the September proposed regulations are released that will determine what “qualified elementary and secondary education expenses” qualify for scholarships. They note that these must be “additive.”
What this means for public schools: Districts seeking clarity on what programming qualifies beyond tutoring and afterschool services will need to wait. It remains unclear whether offerings like new AP/IB courses, new CTE pathways, extended-year services and programs or other supplemental enrichment programs will be eligible. - Student income verification: SGOs can verify student eligibility (under 300% AGI) through multiple methods, including direct documentation (pay stubs, W‑2s, tax returns, IRS transcripts, or commercial data) or categorical eligibility via existing federal, state, or tribal assistance programs. Foster children are automatically eligible (no income verification required), and Treasury is considering additional low‑income area safe harbors.