Federal officials have taken a significant step toward implementing the new federal scholarship tax credit (FSTC), a program poised to reshape K–12 education funding nationwide and open the door to billions of dollars in private scholarship support.

Agudath Israel of America on Wednesday applauded an announcement from the U.S. Department of the Treasury and the Internal Revenue Service (IRS) inviting public comment on several outstanding regulatory questions related to the FSTC, which is scheduled to launch in 2027.

The tax credit, created under recent federal legislation, will allow individual taxpayers to donate to a state-approved scholarship granting organization (SGO) and receive a dollar-for-dollar federal tax credit of up to $1,700. SGOs will then issue scholarships to eligible K–12 students for a broad range of educational expenses, including private school tuition, tutoring, curriculum materials, transportation and other supplemental supports.

But before SGOs can participate, states must formally opt in to the program and submit an approved list of SGOs to the Treasury Department. That requirement places governors and state education authorities in a key gatekeeping role, and the Treasury’s initial memo on the tax credit offered what school-choice advocates described as encouraging signals about how that process will work.

Agudath Israel, which has been deeply involved in shaping the program since its passage, said it is preparing additional recommendations in advance of the Dec. 26 comment deadline. Earlier this year, the organization helped draft a coalition letter offering Treasury initial guidance on issues such as state approval procedures, SGO compliance standards, and reporting requirements.

“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.”

Motzen noted that Agudah will also assist schools, parents, SGOs and other advocacy groups in preparing their own submissions to Treasury, emphasizing the importance of broad stakeholder engagement as the regulations take shape.

Education-policy analysts say the FSTC is one of the most consequential federal school-choice initiatives in decades. Once implemented, it will create a new nationwide mechanism for directing private dollars into K–12 scholarships, supplementing existing state-level tax credit scholarship programs and potentially expanding educational options for hundreds of thousands of families.

Treasury officials have not indicated when the final regulations will be released, but Wednesday’s request for public comment represents the administration’s first formal step toward defining how the credit will function.

Stakeholders will be watching closely: states must decide whether to opt in well before the program’s 2027 launch, and SGOs need clarity on what standards they must meet to qualify.

For now, advocates say the early signs are promising.

“Treasury’s willingness to engage and refine this program is exactly what is needed,” Motzen said. “Properly implemented, this tax credit will transform educational opportunity for children across the country.”

(YWN World Headquarters – NYC)