How to Comment on the Proposed Federal Scholarship Tax Credit Rules
Where to file a comment on the proposed federal scholarship tax credit rules, the dates from December 1 through February 15, the questions Treasury and the IRS asked, and why platforms and providers have a stake in the answers.
Treasury and the IRS published proposed rules for the federal scholarship tax credit on October 2, 2026, and an education company that wants a say in them has until December 1, 2026, to file a comment. Comments go online to the Federal Scholarship Tax Credit docket on regulations.gov, or on paper to the IRS in Washington, where a mailed comment has to arrive by the same date.
The online docket closes at 11:59 p.m. Eastern on December 1. Temporary rules published alongside the proposal take effect on December 1, and comments on them go to the same docket, because the proposed rules repeat their text. What the scholarships may buy is covered on the Federal Scholarship Tax Credit page, and the Analysis page keeps the credit's dates in one list.
Why would a platform or a provider comment?
The proposed rules set out four ways a scholarship granting organization may pay for an expense, and only one of them is limited to the school.
- School charges. Tuition, fees, room and board, and similar charges the school makes are paid to the school. The school must return any payment above the student's cost or made in error.
- Families. A family is paid only as a reimbursement, against a receipt, after the organization verifies the payment and that the expense qualifies, and checks that no other source has reimbursed the same expense beyond its cost.
- Vendors. A vendor is paid directly only if it has been verified as an appropriate provider, is not related to the student, and must return any payment above the student's cost or made in error.
- Digital wallets. A qualified digital wallet can carry the payments, and using one is a way for the organization to show it verified the spending.
The wallet came out of the last round of comments. When Treasury and the IRS asked for input in November 2025, a request that drew more than 2,400 comments, stakeholders asked that organizations be allowed to verify spending through a third-party vendor that checks the expenses and prevents duplication. The preamble says they called it a digital wallet, and the proposed rules now define one.
The wallet definition decides what a platform has to do to carry federal scholarship money. The vendor verification rules decide how a seller gets paid. The rules do not yet say what verification involves. Each organization's annual audit has to cover how it tracks payments, whether direct, through a qualified digital wallet, or by reimbursement, and whether the expenses qualified. Donors, organizations, and states may rely on the proposed rules for contributions made from January 1, 2027, until the final rule is published, as long as they follow them in full.
Thirty states had made an advance election to take part in 2027 on the IRS list dated September 14, 2026. By the count on the Federal Scholarship Tax Credit page, they include seventeen of the eighteen states that run the twenty-four programs on the States page.
What are the dates?
| Date | What happens | Who it applies to |
|---|---|---|
| October 2, 2026 | Proposed and temporary rules published; the comment period opens. | Anyone who may comment |
| December 1, 2026 | Written comments due. The online docket closes at 11:59 p.m. Eastern, and a paper comment has to be received by this date. | Anyone commenting |
| December 1, 2026 | Requests to speak at the hearing due, each with an outline of the topics and the time to be spent on each. | Anyone who wants to speak |
| December 1, 2026 | Temporary rules take effect. | Donors, organizations, and states |
| December 10, 2026, 5 p.m. Eastern | Requests to attend the hearing without speaking due. | Anyone attending in person or by telephone |
| December 15, 2026, 10 a.m. Eastern | Public hearing, in person in Washington and by telephone. It is cancelled if no outline arrives by December 1. | Speakers and attendees |
| January 1, 2027 | The credit begins, and a state's election to take part in 2027 is due. | Donors and states |
| February 15, 2027 | A participating state completes its election by filing its list of scholarship granting organizations. | States and organizations |
A separate notice published October 21, 2026 asks for comments by December 21 on the information the IRS collects under the temporary rules, including the form a state uses to elect into the credit. That notice takes comments by mail to Andres Garcia, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or by email to pra.comments@irs.gov with OMB Control No. 1545-2335 in the subject line. It does not change the December 1 date.
Where does a comment go?
Treasury and the IRS take comments two ways.
- Online, through the comment form on regulations.gov. The notice asks commenters to identify the IRS and the regulation number, REG-117199-25.
- On paper, to CC:PA:01:PR (REG-117199-25), Room 5503, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. A mailed comment has to reach the IRS by December 1.
The online form takes up to 5,000 characters of text and up to 20 attached files of 10 MB each, in formats that include PDF, Word, Excel, and PowerPoint. A commenter files as an individual, as an organization, or anonymously. An anonymous filer gets no emailed confirmation, though a tracking number still appears on screen after submitting.
Are comments on the federal scholarship tax credit public?
Yes. The notice says all comments will be made available on regulations.gov, and a comment submitted through the portal cannot be edited or withdrawn. More than 21,000 comments had been posted to the docket by October 21, 2026, each listed under the commenter's name or as anonymous, and anyone can read them. That includes competitors.
The form warns that a name, address, or phone number in a comment or an attachment may be publicly disclosed. The notice sets out no way to mark business information as confidential, so figures a company includes about its own business are made available with the rest of the comment.
How does the public hearing work?
The hearing is set for Tuesday, December 15, 2026, at 10 a.m. Eastern, in the Auditorium of the Internal Revenue Building at 1111 Constitution Avenue NW in Washington. Visitors enter at the Constitution Avenue entrance with photo identification. Participants may attend by telephone instead.
Each speaker gets 10 minutes, and an agenda is set after the December 1 deadline for outlines. Every request goes by email to publichearings@irs.gov, with the regulation number and one of four phrases in the subject line:
- TESTIFY in Person, to speak at the building, by December 1.
- TESTIFY Telephonically, to speak by phone, by December 1.
- ATTEND In Person, to listen at the building, by 5 p.m. Eastern on December 10.
- ATTEND Hearing Telephonically, to listen by phone, by 5 p.m. Eastern on December 10.
A telephone request receives the number and access code by email. If no outline arrives by December 1, the hearing is cancelled, and the cancellation is published in the Federal Register.
What did Treasury and the IRS ask?
The notice asks for comments on all aspects of the proposed rules. Four of its specific questions bear on a platform or a provider, and one more provision falls under its broader requests.
How should a qualified digital wallet be defined?
The proposed rules define a qualified digital wallet as an electronic payment platform in which a third-party provider runs a streamlined interface for managing the scholarships. Families submit purchase requests through it, it tracks approved expenses, and it keeps controls so that every payment goes to a qualifying expense, either by pre-approving vendors and paying them directly or by requiring timely receipts.
The agencies ask for comments on that definition and on whether the final rules should add more safe harbors for verifying that scholarships are spent on qualifying expenses.
How do the charity rules fit the credit?
Every scholarship granting organization must be a tax-exempt charity that is not a private foundation. The question follows the preamble's discussion of how an organization pays a school, a vendor, or a family, where it cites the principle that a charity paying individuals must do so "on a true charitable basis." The agencies ask how the charity rules interact with the credit and whether the final rules need to clarify anything.
Which programs should count as proof of income?
A student is income-eligible when household income for the calendar year before the application is not greater than 300 percent of the area median gross income. An organization may accept proof that someone in the household takes part in SNAP, TANF, WIC, Section 8 housing, or SSI, with documentation dated within the last 12 months, in place of checking income directly.
The agencies ask which other needs-based programs, such as state or tribal programs, belong on that list. Each program added in the final rule would give an organization another way to verify a household's income from a determination a government agency has already made.
How should a multistate organization measure its scholarship work?
An organization on the lists of more than one participating state would need at least 85 percent of its activities to be scholarship granting. A single-state organization that meets the same 85 percent test may apply the operating rules to its federal scholarship account rather than to the whole organization. Either way, the test is separate from the statute's requirement that every organization spend at least 90 percent of its income on scholarships.
The agencies ask whether the share should be measured by receipts, expenditures, staff time, program-service activity, or another metric, and whether 85 percent is a reasonable threshold. The answer decides how much of a multistate organization's work can sit outside granting scholarships.
What does the tutoring safe harbor require?
The proposed rules give organizations a safe harbor on income verification for scholarships that pay for individual academic tutoring, or special needs services for a special needs student, at schools in low-income areas, meaning a school located in a qualified census tract or one that certifies at least 80 percent of its students live in one. When the school selects the students on the basis of each student's academic or special need, those students are treated as meeting the income test without their household income being verified.
In return, the organization has to obtain an annual third-party audit and give it to the state. The audit certifies that the school meets the census tract test and chose the students on the basis of need. It also certifies that the tutors or other providers were qualified to render the services, and that each student's need was diagnosed independently by a professional not associated with the provider. And it certifies that the services met appropriate quality standards, ran with the duration and frequency commonly required to produce benefit, and had their impact on each student assessed.
No question in the notice names this safe harbor. Its request on whether less burdensome alternatives would still guard against fraud or improper payment of scholarships reaches it, as does the request on all aspects of the rules. A separate request asks how many small entities the rules affect and at what cost.
What does a useful comment contain?
A comment the agencies can use does three things.
Names the provision. It identifies the section of the proposed rules it addresses, so the comment can be matched to the text.
States the problem. It says what the provision would do to the commenter's business, with the facts behind it.
Offers the language. It writes out the wording the commenter would rather see in the final rule.
Regulations.gov's own guide to commenting makes the same points. It says "the public comment process is not a vote," and that influential comments tend to bring evidence or a perspective the agency had not considered. When Treasury and the IRS first asked for input on the credit, in November 2025, they wrote that comments detailing factual situations would be "especially helpful." A speaker at the hearing has to send an outline of topics and the time for each by December 1.
Is the guidance on qualified expenses out yet?
No. The proposed rules say the agencies intend to issue guidance that will "clarify the meaning of qualified expenses and schools" as soon as possible, that it will be issued separately, and that they are treating it as a high priority. The 2026-2027 Priority Guidance Plan lists the project without a deadline. As of October 21, 2026, it had not appeared in the Federal Register, in Internal Revenue Bulletins through October 16, or in the IRS newsroom.
That guidance will clarify which expenses and schools qualify. The comment period on the payment rules may close before it arrives.
If I ran a platform, or sold through one, I would file a comment before December 1. The rules on digital wallets and vendor verification are still open, and I expect the final rule to govern the first scholarships spent, in the 2027-28 school year.
A company that sells into the twenty-four state programs has a direct stake in both, and this comment period is its chance to say so on the record. The expense guidance is the piece I expect most providers are waiting for. It may not arrive before December 1, and the payment rules are open for comment now.
Frequently asked questions
When are comments on the proposed federal scholarship tax credit rules due?
December 1, 2026. The regulations.gov docket closes at 11:59 p.m. Eastern that day, and a paper comment has to reach the IRS by the same
