Treasury & IRS Allow States to Make an Advance Election
The Department of the Treasury and IRS issued Revenue Procedure 2026-6 allowing states to make an advance election to participate in a new tax credit for calendar year 2027. This new credit, established under the One Big Beautiful Bill Act, is for contributions to scholarship granting organizations (SGOs) that serve elementary and secondary school students from low- and middle-income families.
Beginning January 1, 2027, individual taxpayers may claim a nonrefundable federal tax credit for cash contributions to SGOs providing scholarships for elementary and secondary education expenses. The credit allowed to any taxpayer is limited to $1,700. However, for contributions to an SGO to be eligible, the SGO must be on a state list of one or more covered states for the applicable calendar year. A covered state is defined as one of the states, or the District of Columbia, that for a calendar year voluntarily elects to participate in the credit and identifies SGOs in the state.