WASHINGTON, D.C. â The Treasury Department and Internal Revenue Service this week opened a sweeping public comment period on a new federal tax credit tied to Kâ12 scholarship donations, a key provision of the recently enacted One, Big, Beautiful Bill that could reshape how families support schools nationwide.
Under Notice 2025-70, the IRS is requesting feedback on how to implement the credit, which beginning Jan. 1, 2027, will allow individual taxpayers to claim up to $1,700 in nonrefundable credits for cash contributions to Scholarship Granting Organizations, or SGOs. These groups provide tuition assistance for elementary and secondary students from low- and middle-income households.
To qualify, states must formally elect to participate and submit to the IRS an approved list of eligible SGOs operating within their borders. Treasury officials say the comment period will help determine how states certify these organizations, how multistate SGOs should be treated, and what reporting and recordkeeping standards will apply.
Public comments referencing âIRS-2025-0466â are due by Dec. 26 through the Federal e-Rulemaking Portal or by mail.
The IRS also urged taxpayers to begin preparing early for the 2026 filing season, noting that the One, Big, Beautiful Bill introduces major changes across federal tax rules, credits and deductions. New provisions include eliminating tax on tips, overtime pay, and car loan interest, along with a temporary deduction benefiting seniors.
Agency officials warned that taxpayers should gather key documents now â including Forms W-2, Forms 1099, digital asset transaction records, and bank account information â to avoid delays or mistakes once filing begins.
The IRS highlighted its online account system as the fastest way for individuals to access past returns, verify income, manage payments, retrieve Identity Protection PINs, and authorize tax professionals.
Taxpayers expecting refunds were reminded that direct deposit remains the quickest option. Following Executive Order 14247, the IRS began phasing out paper refund checks on Sept. 30, meaning most filers will need to provide routing and account numbers to receive refunds electronically.
Individuals without bank accounts can explore options through FDIC-insured institutions, credit unions, or financial service programs for veterans. Digital wallets and prepaid debit cards may also support direct deposit if tied to valid account and routing numbers.
With proposed regulations still forthcoming, federal officials say the new scholarship credit marks a significant shift in how education-related contributions are incentivized â and they expect robust public engagement before the rules are finalized.
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