On Oct. 2, 2026, the Internal Revenue Service (IRS) issued temporary regulations and proposed final regulations to implement the Federal Scholarship Tax Credit (FSTC). The program — also known as the Education Freedom Tax Credit — will take effect on Jan. 1, 2027. Both the temporary and proposed regulations will be effective in 2027, until the IRS issues final regulations in 2028.
The regulations are divided into five sections, each related to a different aspect of the program. This is the first in a five-part series looking in depth at each section of the regulations. Below, we take a look at how the federal government is defining key terms for the program with implications for eligibility, use of funds, and more.
About the FSTC
