- with readers working within the Oil & Gas industries
- within Strategy topic(s)
The Internal Revenue Service recently issued Revenue Procedure 2026-6, which provides procedural guidance allowing States to make an Advance Election to participate in a new federal tax credit program created under the "One, Big, Beautiful Bill Act" (Public Law 119-21) for calendar year 2027. This guidance is the first step in administering the new nonrefundable federal income tax credit for individual contributions to Scholarship Granting Organizations (SGOs) that support elementary and secondary education expenses.
Under § 25F of the Internal Revenue Code, individuals may claim a federal tax credit of up to $1,700 for cash contributions to SGOs that provide scholarships for qualified educational expenses. Eligibility for the credit depends not only on the taxpayer's contribution but also on whether the organization receiving the contribution is included on an IRS-recognized list of SGOs submitted by a participating State. To qualify, a State must voluntarily elect to participate and must identify its qualifying SGOs to the IRS.
Revenue Procedure 2026-6 establishes a formal Advance Election process that permits a State to signal its intent to participate in the credit before submitting its official list of qualifying SGOs. This advance process is intended to give SGOs and other stakeholders additional planning time before the credit's implementation for tax year 2027. Under the revenue procedure, States may submit Form 15714, Advance Election to Participate Under Section 25F for 2027, beginning January 1, 2026, through the deadline specified in future IRS guidance. The IRS will acknowledge receipt of valid Advance Election submissions, but no alternative forms or attachments, including SGO lists, will be accepted with the Advance Election form itself.
Importantly, the revenue procedure emphasizes that an Advance Election must ultimately be "perfected" by submitting the State's certified list of qualifying SGOs in accordance with statutory requirements and future IRS instructions. Failure to do so by the applicable deadline would mean the State has not met the statutory prerequisites to be treated as a covered State under § 25F for tax year 2027, making contributions ineligible for the federal credit.
Revenue Procedure 2026-6 offers critical clarity on the procedural pathway States must follow to join the new federal education tax credit regime. As future guidance is released clarifying filing deadlines and election "perfection," stakeholders should monitor developments closely to ensure compliance and maximize the benefits of this new credit framework.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
