Moving before 2027? The federal school choice tax credit follows the state, not you

The milestone is this month, and it has not landed

On June 9, 2026, Kevin Salinger, Treasury’s Deputy Assistant Secretary for Tax Policy, delivered a preview of the forthcoming section 25F guidance. The first paragraph set the date: “Treasury and the IRS expect to issue proposed regulations this coming back-to-school season – no later than the end of September. States, SGOs, and taxpayers will be able to rely on those proposed regulations for tax year 2027.” Treasury’s press release the next day repeated it.

Today is September 10, and the proposed regulations have not been issued. That is the milestone, and if Treasury keeps its word it is three weeks out at most.

If you are moving in the next few months, that date matters more to you than to almost anyone else. The credit is federal, but whether it reaches your family is decided state by state, and most of that deciding is unfinished. The mechanics themselves, the $1,700 cap and the scholarship-organization chain, are in our explainer on how the credit works. This piece is about what is still undecided, and what changes when your address does.

The credit lives in a state, not in your household

Two lines in the statute do most of the work. Section 25F(c)(1) says the credit exists only in a “covered State,” meaning one of the States, or the District of Columbia, that “for a calendar year, voluntarily elects to participate.” Section 25F(c)(3) says a qualified contribution is a cash gift to a scholarship granting organization (an SGO) that uses it to fund scholarships for eligible students “solely within the State.”

Read those together. The money you contribute is tied to the state where the SGO is listed, and it can only fund scholarships inside that state. A federal credit, yes, but one that switches on or off at the state line.

The statute is silent on the question movers ask first: what happens when the donor’s own address changes partway through a year. It ties the contribution to the SGO’s state and says nothing about the donor’s residence, and we found no guidance that does. We are not going to guess.

Thirty states have raised a hand; none has finished

The IRS keeps a participating-state list. Its heading reads “Participating states for 2027 (as of July 24, 2026),” and it names 30. The other 21 jurisdictions, 20 states plus the District of Columbia, were not on it as of that date. Read it rather than trusting a count, this one included: the roster differs in places from what was reported in the spring, and the IRS page, with its date on it, is the authority. Our state-by-state participation map walks through each state.

Being on that list is not the finish line. What those 30 states have done is an advance election. Under Rev. Proc. 2026-6, a state files Form 15714, “Advance Election to Participate Under Section 25F for 2027”, which is the state saying it intends to participate and nothing more. It then has to perfect that election by submitting a list of the SGOs located in the state that spend at least 90 percent of their income on scholarships for eligible students. The statute puts that list due January 1 of the calendar year the election covers, or for 2027 “as early as practicable.” In Notice 2025-70, a December 2025 request for comments, Treasury and the IRS said they anticipate the forthcoming proposed regulations “would require each State electing to participate under § 25F for the 2027 calendar year to submit to the IRS, by a specified date before January 1, 2027,” its list and its certification. That specified date is what the end-of-September regulations are expected to set.

The consequence of missing that deadline, in the IRS’s own words at Rev. Proc. 2026-6, section 3.02: a state that fails to submit its list “would not meet the statutory requirements, and, as a result, no organization in that State would qualify as an SGO under § 25F for calendar year 2027.” For that state, the whole of 2027 is gone.

The IRS page says the same thing in plain English: “A state or the District of Columbia (state) must choose to participate in the FSTC and provide a list of SGOs in that state to the IRS before an individual taxpayer can donate to an SGO within that state and claim the FSTC.” As of today, no state SGO list exists.

Does the credit exist where you are going?

Two of our map metros make the point.

Phoenix to Houston: as of the IRS’s July 24, 2026 list, Arizona had not elected in and Texas had. Nothing about the family has changed. The answer has. Texas has an advance election with its SGO list still to come; Arizona has nothing for the credit to attach to. If that move is on your shortlist, the Phoenix school map and the Houston school map are where to compare what is actually there today.

Chicago to Nashville is the same shape. Illinois was not on the list; Tennessee was, and has not yet perfected its election.

Move	Origin on the IRS list (July 24, 2026)	Destination on the IRS list (July 24, 2026)	What it means for you
Phoenix, AZ → Houston, TX	No	Yes	Moving into a state that elected in. Whether a Texas SGO exists for 2027 depends on Texas filing its list.
Chicago, IL → Nashville, TN	No	Yes	Same shape: destination elected in, list still to come.
Houston, TX → Phoenix, AZ	Yes	No	Leaving a state that elected in for one that had not, as of that date.
Atlanta, GA → Charlotte, NC	Yes	Yes	Both ends elected in. Both still have to file, and a contribution stays tied to the state where the SGO is listed.
Los Angeles, CA → Portland, OR	No	No	Neither state had elected in as of July 24, 2026.

“Area median income” moves when you do

Section 25F(c)(2) defines an eligible student two ways: the student “is eligible to enroll in a public elementary or secondary school,” and household income is “not greater than 300 percent of the area median gross income (as such term is used in section 42).” Area. Not state, not national.

Section 42 is the low-income housing credit, so the yardstick arrives here from a housing program, and nothing in the statute says whose area applies to a family applying for a scholarship. On the natural reading, the same household income is measured against a different median in a different metro, so a family could sit on one side of the 300 percent line in the city it is leaving and the other side in the city it is arriving in. Until the proposed regulations say, that is a reading and not a rule, which makes it the first thing to ask an SGO about.

Treasury’s preview sketched how SGOs are expected to check that income, through “paystubs, tax returns, IRS transcripts, Forms W-2, or through crediting agencies or commercial data sources.” Preview language, subject to what Treasury calls ongoing legal review.

What to actually do before the end of September

Check whether your destination state is on the IRS list, and note the date on that list. If it is not there, nothing in the program reaches you in that state unless it elects in later. If it is there, the state has said it intends to participate and has not yet finished the job.

Then watch for the proposed regulations. Beyond the SGO-list date, they are expected to spell out the annual audit each SGO would owe and how donors will be told what to report.

And do not plan a school budget around a scholarship that has no organization behind it. No state SGO list exists, so there is nothing to apply for today, and nothing in the statute or Treasury’s preview sets an award size.

What you can evaluate right now is the thing the credit was never going to replace: the public schools in the place you are moving to. Start with the state pages and maps above, and let the tax credit catch up to your move rather than the other way around.

This article is informational and does not constitute tax or legal advice. Tax laws change and individual circumstances vary. Consult a qualified tax professional before making contributions or claiming the credit.

Sources

1. United States Code, 26 U.S.C. § 25F, added by § 70411 of Public Law 119-21 (July 4, 2025), read via the Legal Information Institute, Cornell Law School. Retrieved September 10, 2026.
2. U.S. Department of the Treasury, Preview of Forthcoming Section 25F Guidance, remarks by Deputy Assistant Secretary for Tax Policy Kevin Salinger, June 9, 2026. Retrieved September 10, 2026.
3. U.S. Department of the Treasury, Treasury Previews Education Freedom Tax Credit Guidance, press release, June 10, 2026. Retrieved September 10, 2026.
4. Internal Revenue Service, Federal Scholarship Tax Credit (FSTC), page last reviewed or updated July 27, 2026. Retrieved September 10, 2026.
5. Internal Revenue Service, Rev. Proc. 2026-6, effective January 1, 2026; §§ 2.02, 3.02 and 4.01 are the passages cited above, including the “no organization in that State would qualify” sentence from § 3.02. Retrieved September 10, 2026.
6. Internal Revenue Service, Form 15714, Advance Election to Participate Under Section 25F for 2027, cited via Rev. Proc. 2026-6 § 4.01. Retrieved September 10, 2026.
7. Internal Revenue Service, Notice 2025-70, Request for Comments on Individual Tax Credit for Qualified Contributions to Scholarship Granting Organizations, 2025-50 I.R.B. 773 (December 8, 2025). Its § 3.02 is the source for the “by a specified date before January 1, 2027” sentence quoted above, and only that. The notice is a request for comments, so it imposes no requirements of its own. Retrieved September 10, 2026.