North Carolina adopts its §25F SGO rules and aims to open applications in late December

North Carolina has written the rulebook for its first list of scholarship granting organizations (SGOs) under the federal Education Freedom Tax Credit (§25F). The board of the North Carolina State Education Assistance Authority (NCSEAA), the agency the state's opt-in law put in charge of the list, adopted the “Rules Governing the Educational Choice for Children Program” on October 30, 2026, and the Authority has posted them on its program page. On November 10 it gave the first dates. Answering questions from software vendors, it wrote that the date for accepting applications “has not yet been determined, but the estimate is late December for the target opening for the initial phase,” with the initial closing “late January/beginning of February.” North Carolina's list is due to the IRS by February 15, 2027.

Ahead of the statute's clock. Session Law 2026-6, which the legislature enacted in June, gave the Authority until 120 days after the federal regulations published to write its rules, an outside date around the end of January 2027 (how that deadline works). The board adopted them four weeks after Treasury's proposed and temporary regulations appeared in the Federal Register on October 2. The 13 pages track the federal text closely. Their authority note cites the temporary regulations and says the proposed rules are “used as guidance if issue not specifically addressed in temporary rules,” and the rules expire no later than October 1, 2029, the same date the temporary regulations do.

A pending Form 1023 is fine. An organization whose application for 501(c)(3) recognition is still with the IRS can apply. It sends documentation that it has applied but not yet been recognized and that its exemption, if granted, “will be effective retroactively to a date that is on or before January 1” of the list year, and North Carolina's list will mark it as pending IRS recognition. That is the federal procedure for pending applicants in the temporary regulations, so a nonprofit formed before the end of 2026 can still aim for the 2027 list (which states take pending applicants, and how a pending 501(c)(3) works).

What “located in North Carolina” means. The rules define it as being registered with the North Carolina Secretary of State as a nonprofit under Chapter 55A of the General Statutes, with a physical registered agent address in the state, and in compliance with that chapter. A nonprofit incorporated elsewhere gets there with a certificate of authority from the Secretary of State and a North Carolina registered agent. Our North Carolina application page lists what that costs, along with the state's separate charitable solicitation license.

What you'll send. Rule .0201 asks for at least your name, address and phone number, your Secretary of State registration, your EIN, and your IRS determination letter or the pending-application documentation, plus any corrective action from the IRS, another state or the Authority. An organization that had no annual reporting to do the year before, which is every applicant for the first list, also sends its governing documents or bylaws and the written policies and procedures that show how it will meet each requirement, along with copies of the information and certifications it has to give the IRS before the end of the year. The Authority can ask for more. The requirements themselves come straight from §25F and the proposed rules: scholarships to 10 or more students who don't all attend the same school; at least 90 percent of the organization's income spent on scholarships for eligible students, or the 85 percent alternative applied to the segregated account; scholarships used only for qualified expenses and awarded only to eligible students; priority for last year's recipients and then their siblings; and no contributions earmarked for a particular student. An eligible student's household income can't exceed 300 percent of area median gross income, and the student must be eligible to enroll in a North Carolina public school. A multistate SGO meets the same conditions with a segregated account for North Carolina alone.

The yearly audit scales with size. Every approved SGO must commission an annual financial and programmatic audit by a qualified independent third party and give the results to the Authority, and missing the deadline can cost it its place on the list. With total receipts over $500,000, that means an outside professional or accredited body; at $500,000 or less, a committee of independent people unrelated to management can do it. Both match the proposed federal audit rule. The rules also set out removal. The Authority can drop an SGO that stops meeting the requirements; the organization then has 10 business days from receiving the certified-mail notice to ask for reconsideration, without adding new information, and stays on the list while that's pending unless the IRS has already removed it. The executive director's final answer comes within 15 business days.

Where the dates come from. The November 10 timing is an estimate, given in an addendum to the Authority's October 30 request for information on software to take SGO applications. It said it hasn't decided whether to hire an outside vendor but “does anticipate beginning to work with interested SGO applicants in early December.” It said documents may come in at different stages once applications open, starting with basic identifying information, and that for the software, notification features come next and the audit functions later. Vendor responses are due November 13. Rule .0202 has the Authority decide before the IRS deadline, and an organization not found eligible by then applies again for the next year, so the paperwork is worth finishing before the window opens.

What to do now. Register with the Secretary of State, finish bylaws and written policies that answer each requirement, and send questions to SGO_NC@ncseaa.edu; the Authority expects to start working with interested applicants in early December. Once the list goes to the IRS, the Authority will post the same list on its website. North Carolina's public schools are already moving: the Moore County school board approved its own SGO foundation, and Columbus County educators formed one. Follow the state on our North Carolina SGO page and state page, see every state's process on official SGO lists, and if you're starting from scratch, begin with how to start an SGO.