A week after Treasury's §25F preview: what tax advisers are telling clients, and how states are already reacting

A week is long enough to tell the difference between an announcement and an event. When Treasury previewed the forthcoming §25F regulations on June 10, 2026, the document carried a disclaimer that it was “subject to ongoing legal review” and that nothing was law until the proposed rule publishes, expected no later than the end of September. Yet in the days since, the federal Scholarship Tax Credit (FSTC / ECCA / §25F) conversation has visibly moved off the question of what Treasury said and onto what people are doing about it. Two things happened in that week worth pulling together: tax advisers turned the preview into actionable client guidance almost immediately, and the preview's most contested signal, that states cannot bolt their own conditions onto participating Scholarship Granting Organizations (SGOs), started shaping live state decisions. Neither is a new federal action, which is why this is analysis rather than a fresh headline, but together they are the real story of the week.

The professional-services reception was fast and strikingly uniform. Within days the accounting and tax bar, CLA, Foster Swift, Bonadio, Roth&Co, and Brownstein, plus the trade press at Accounting Today and Financial Planning, converted the preview into the same short build-now checklist: open a dedicated §25F segregated account so the 90%-of-income test can be measured against that account; budget for an annual independent financial and programmatic audit; and build donor receipting around the coming unique-donor-number system, under which an SGO never collects a donor’s Social Security number. We have folded those items into our operator guides rather than restate them as if they were new here: the step-by-step how-to-start-an-SGO checklist now carries them, alongside a clause-by-clause walkthrough of the preview. What made advisers willing to tell clients to act on a non-final document was one word, “reliance”: Treasury said states, SGOs, and taxpayers can rely on the proposed regulations for tax year 2027. The lone caution every alert repeated: rely, but do not mistake a preview for the final rule.

The preview’s sharpest edge is not an operational detail but a question of power, and that is where the week’s state news connects. Treasury previewed a “located in” standard and added that states “may not impose SGO-specific requirements more restrictive than §25F’s own”; Deputy Assistant Secretary Kevin Salinger told stakeholders, more bluntly, that states cannot impose “substantive” rules on scholarship organizations beyond what federal law sets. That single line is the through-thread of the past week. Vermont enacted Act 164 on June 18, a conditional opt-in that tries to steer the money toward public and approved-independent schools, exactly the kind of SGO-specific condition the preview signals is preempted, and the act’s own clause tells the governor to decline if federal rules invalidate the conditions. Rhode Island built a legislative gate the same day, and Oregon’s Gov. Kotek had already declined over this very complaint that Treasury would not let states write their own rules. The preview did not start that fight, but it told every state weighing an “opt in on our own terms” strategy that the terms may not be theirs to set, the unresolved question we examine in whether §25F is a federal floor or a ceiling.

It is worth being precise about what the preview deliberately left unresolved, because those gaps are where the next month of practitioner attention will go. Treasury did not settle the joint-filer treatment of the $1,700 cap; the prevailing professional read, reflected in Brownstein’s Q&A guidance, is that the credit will be limited to $1,700 per return rather than doubled for married couples, the same conclusion we reach in our explainer on why the credit is $1,700, not $3,400, but it remains expectation rather than rule. The preview also left the credit’s coordination with the Alternative Minimum Tax unaddressed, deferred the scope of eligible expenses under section 530 (tutoring, special-needs services, and the like) to a separate later workstream, and did not finalize the state-list deadline mechanics for the 2027 startup year. None of these is trivia: the joint-filer answer changes the math for two-earner donor households, and the 530 expense list determines what a scholarship can actually pay for.

The forward read has not changed, only firmed up. The binding date is still the end of September, when the proposed regulations are expected, and the program still goes live January 1, 2027. What the past week added is permission to act: because reliance is granted, an operator can build to the preview now while flagging the genuinely open items (joint-filer cap, AMT, 530 expenses) as subject to change. For founders doing exactly that, the how-to-start-an-SGO guide carries the full checklist, and the national participation map tracks where each state has landed, including the ones now testing the limits of state authority.