Tax credits for K-12 scholarships are one step closer to implementation.

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) recently announced they are seeking feedback on key issues related to the new federal scholarship tax credit (FSTC).

Starting in 2027, the FSTC allows individual taxpayers to contribute to a nonprofit scholarship granting organization (SGO) and receive a dollar-for-dollar tax credit worth up to $1700. The SGO then pools the funds and distributes scholarships to eligible students for a wide range of K-12 educational expenses including private school tuition However, in order for SGOs to be approved, the state in which they are located must opt in to the tax credit and include them on a list sent to Treasury.

The administration’s first official memo on the FSTC included some encouraging hints about where they may end up on key issues, such as the role of governors in approving scholarship organizations. Agudah helped draft a coalition letter to the Treasury earlier this year with initial comments and will be following up with additional recommendations. Agudah will also be providing guidance to other stakeholders who want to submit comments to Treasury before the December 26th deadline.

Agudath Israel of America celebrated the announcement.

“We thank Treasury Secretary Scott Bessent and Assistant Secretary Ken Kies for sharing our sense of urgency in prioritizing this tax credit in rule-making,” said Rabbi A. D. Motzen, Agudath Israel of America’s national director of government affairs. “This game-changing legislation has the potential to generate billions of dollars to enhance the education of children in all 50 states and we look forward to working with Treasury and other stakeholders to get it right.”