$3,400: married couples can claim double the §25F credit under Treasury's proposed rules

A married couple filing a joint return can claim up to $3,400 a year in federal Education Freedom Tax Credit, twice the figure most donors have been planning around. That is the reading in the proposed §25F regulations Treasury and the IRS released on October 1, 2026, and the rule text is short: "For purposes of section 25F(b)(1), married taxpayers who elect to file a joint return under section 6013(a) and § 1.6013-1(a) are treated as separate taxpayers." Each spouse has their own $1,700 cap. The rules are proposed, not final, but Treasury says taxpayers may rely on them for contributions made on or after January 1, 2027. Our full breakdown of the rules covers everything else in the package.

Why this was ever a question. The statute caps the credit at $1,700 "to any taxpayer for any taxable year" and says nothing about filing status. Elsewhere in the tax code, Congress usually spells it out when a limit differs for married couples, as Treasury itself notes with the 2018 version of the state and local tax deduction cap ($10,000, or $5,000 for married filing separately) and the first-time homebuyer credit. With no such language in §25F, the cautious reading was one $1,700 cap per joint return, and that is the reading we gave in May. In August, Sen. Cindy Hyde-Smith's S. 5322 proposed settling it at $3,400 by amending the statute.

Treasury's reasoning. Treasury sided with the "significant number of stakeholders" who asked that "taxpayer" apply to each spouse. It pointed to regulations that have long treated a joint return as two taxpayers sharing one income. One of them reads: "Since, in the case of a joint return, there are two taxpayers (although under section 6013 there is only one income for the two taxpayers on such return, i.e., their aggregate income), two exemptions are allowed on such return, one for each taxpayer spouse." Treasury added that "the statutory language of 'any taxpayer' without any limitation in section 25F also implies the broadest interpretation," consistent with the Code's definition of a taxpayer as "any person subject to any internal revenue tax."

How the $3,400 works. Treasury's own example in the proposed rule: in January 2027, spouses B and C each contribute $2,000 to an SGO, each designates the full amount as a qualified contribution, and each receives a written acknowledgment. Each gift produces a $1,700 credit, "resulting in a total of $3,400 that may be claimed on B and C's joint return." The $3,400 that earned the credit cannot also be deducted as a charitable contribution, but the remaining $600 of the $4,000 may be deductible if it meets the usual charitable deduction rules. The practical point is in the facts of the example: the credit follows each spouse's own designated gift. The proposal does not say how a single gift from a joint account would be split between spouses, so the clean approach is the one in Treasury's example, two gifts, one from each spouse, each designated as a §25F contribution when it is made.

The limits that still apply. The credit is nonrefundable, so the couple's combined credit cannot exceed their federal tax liability for the year, and it is allowed against both the regular income tax and the alternative minimum tax. Any unused amount carries forward for up to five years, with older credits used first. A couple whose tax bill is smaller than $3,400 in a given year does not lose the difference; it rolls into later years.

Proposed, and reliable for 2027. Comments on the proposed rule are due December 1, 2026, and a public hearing is set for December 15. Until a final rule is published, Treasury says taxpayers "may rely on these proposed regulations for qualified contributions made on or after January 1, 2027," provided they follow the proposed rules "in their entirety and in a consistent manner." The full text is in our archive of the proposed regulations.

What it means for SGOs. The ask to a married household just doubled. Donor materials built around "$1,700 per return" now undersell the credit by half for couples, and a two-spouse ask needs two designated gifts. Because the rules give a unique donor number to each donor who designates a gift, a couple giving separately should expect separate acknowledgments to carry onto their Form 8525. Our guide to recruiting donors for your SGO and the year-end tax planning guide cover the donor side. If you are still forming your organization, the free SGO Builder walks through each step, and the SGO directory shows who is already operating.