RALEIGH – The U.S. Treasury Department and Internal Revenue Service have proposed rules for the federal school-choice tax credit, setting the framework North Carolina would use after state lawmakers opted into the program earlier this year.
The proposal would allow a taxpayer to claim up to $1,700 a year for cash contributions to a certified scholarship-granting organization. Married taxpayers filing jointly could claim up to $3,400, Treasury said. The program is scheduled to begin Jan. 1, 2027. Treasury said taxpayers, states and scholarship-granting organizations may rely on the proposed regulations for qualifying contributions beginning that day.
North Carolina joined the program through House Bill 87. The General Assembly completed a veto override June 3, and the resulting law designates the North Carolina State Education Assistance Authority to coordinate the state’s participation and approve scholarship-granting organizations.
The proposed federal regulations would require participating states to submit lists of certified organizations to the IRS. EdNC reported that the initial lists would be due Feb. 15, 2027. North Carolina’s law directs the State Education Assistance Authority to adopt an approval process within 120 days after final federal regulations take effect.
Treasury also proposed limits on the additional operating requirements states could impose on scholarship-granting organizations. The proposal includes reporting, audit and anti-fraud provisions, but the details can change before the rules become final.
Public comments are due by the end of November, and Treasury has scheduled a public hearing for Dec. 15, according to EdNC. The department said 30 states have opted into the program and estimated that 96% of children nationwide could be eligible for scholarships, although eligibility and awards would depend on participating organizations and final program rules.
North Carolina’s participation does not immediately create scholarships, guarantee approval for any organization or make every contribution eligible for the credit. The next state-level steps depend on final federal regulations and the State Education Assistance Authority’s approval process.
The rulemaking is consequential for North Carolina because it will determine how the state identifies eligible organizations, oversees their participation and connects donors with a new federal tax credit beginning in 2027.
Sources
- U.S. Treasury Department: proposed regulations for the federal tax credit scholarship program
- North Carolina General Assembly: House Bill 87 / Session Law 2026-6
- EdNC: proposed federal rules and North Carolina implementation timeline
Photo Credit: Carol M. Highsmith / Library of Congress via Wikimedia Commons, public domain with no known restrictions on publication. U.S. Treasury Department Building in Washington. Cropped and resized, then combined with the unchanged NCPN footer and logo.
Editor’s Note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.