Notice 2025-70: Request for Comments on Individual Tax Credit for Qualified Contributions to Scholarship Granting Organizations

IRS Notice 2025-70 | IRS | Issued Nov. 25, 2025; published in IRB 2025-50 (Dec. 8, 2025)

IRS Notice 2025-70 is the first IRS guidance interpreting new Internal Revenue Code Section 25F, the federal Education Freedom Tax Credit added by Section 70411 of the One, Big, Beautiful Bill Act (Public Law 119-21). It requests public comments while previewing how forthcoming proposed regulations will treat Scholarship Granting Organization (SGO) requirements: an SGO must be described in Section 501(c)(3), exempt under 501(a), and not a private foundation; keep qualified contributions in one or more separate accounts to prevent co-mingling; serve 10 or more students who do not all attend the same school; and spend not less than 90 percent of the organization's income on scholarships for eligible students. The notice states the credit may not exceed $1,700 per return, carries forward up to five years on a first-in, first-out basis, and reads the 90 percent test against all of the organization's income, including unrelated business income, not just the donations held in the separate account.

Why this matters: For schools and donors, the notice is the earliest official signal of how the IRS intends to define which organizations can receive credit-eligible contributions and how the 90 percent income test will be measured before proposed regulations are published.