Virginia won't take part in §25F in 2027: Gov. Spanberger won't finish the enrollment Youngkin started

Virginia won't take part in the federal scholarship tax credit in its first year, if Gov. Abigail Spanberger's decision holds. The Washington Post reported on the evening of November 13 that Spanberger will not finish the enrollment her predecessor, Glenn Youngkin, started in January. According to the Post, which reviewed the documents, a recent letter from the IRS said Virginia still had to complete the process. The Post's summary of its story says she cited doubts about the program's benefits for public school students. Her office hadn't posted a statement on its newsroom as of early November 14.

What the IRS letter is about. Youngkin filed Virginia's advance election days before he left office, which made Virginia the first state to opt in. Under Treasury's temporary regulations, which take effect without a comment period and apply from September 1, 2026, an advance election is only the first step. The state “must perfect its election by providing its State SGO list,” and for 2027 that list is due between October 1, 2026 and February 15, 2027 (§ 1.25F-5T(c)(3)(ii)). If the list never arrives, “no organization in that State would qualify as an SGO for the calendar year” ((c)(3)(ii)(C)). Treasury's explanation of the rules describes this exact route: a state can opt in by making an advance election “and then later, in effect, opt out by failing to perfect the election.” Nothing has to be revoked. We laid out the path in October, when the Virginia Education Association asked Spanberger to take it.

Virginia may stay on the IRS page. The IRS publishes a list of the states that have made an advance election (§ 1.25F-5T(c)(3)(iii)), and on November 13 its page still named Virginia among 31 participating states, the same day it added New Mexico. That listing doesn't carry Virginia into 2027 without the SGO list. Our state tracker now counts Virginia as out, which leaves the tracker at 31: the IRS's 31, minus Virginia, plus New York, whose governor has decided to join but whose election isn't on the IRS page yet.

How Virginia got here. Youngkin's January 9 letter to Treasury named eight scholarship organizations, and on January 16 he announced five more, 12 in all because one name appeared on both lists. Both came before the federal rules, and neither was a filed list. Spanberger took office in mid-January. Her campaign education plan had pledged to “reject efforts to divert funding from public education to pay for voucher programs.” In February, HB 359, a bill that would have put state testing and other rules on private schools taking tax-credit scholarships, cleared the House Education Committee and was carried over to 2027 (could Virginia get out?). On October 2, the day the rules were published in the Federal Register, the Virginia Education Association urged her “not to complete enrollment in the federal voucher program.” On October 9 she said Virginia's status “remains in question.” Three days later the Chesapeake School Board voted 7-2 to back the program instead of a union resolution asking her to opt the state out (the Chesapeake vote), and on October 29 Suffolk's board voted 4-3 to put off a similar resolution until November 12. Suffolk's outcome hasn't been reported.

A first. Virginia was the first state to opt in, and it's now the first whose election is on file with the IRS and won't be completed. The other governors who said no did it before filing anything. Oregon's Tina Kotek declined again in June, Minnesota's Tim Walz said it was “never going to happen”, and Wisconsin's Tony Evers vetoed an opt-in bill. This fall the traffic has mostly run the other way: New Mexico's Michelle Lujan Grisham, whose office said no in August 2025, opted in on November 4, and New York's Kathy Hochul joined on October 9.

Who it affects. Virginia's public schools enrolled 1,258,852 students in 2023-24, according to the National Center for Education Statistics. A §25F scholarship can go to any K-12 student who is eligible to enroll in a public school and lives in a household at or below 300% of area median gross income, whether the student attends a public, charter, private or religious school, and Treasury has put the eligible share at about 96% of children in participating states. Under Treasury's proposed rules, which may be relied on for 2027, an SGO funds only students who live in the state whose list it's on (§ 1.25F-3(c)(7)), so without a Virginia list, Virginia students can't receive these scholarships in 2027. One exception matters in a state with Naval Station Norfolk and the Pentagon: a student who is a dependent of a member of the Armed Forces counts as within both the state of the student's domicile and the state where the service member lives ((c)(7)(ii)). A military family stationed in Virginia whose legal home is a participating state, such as Texas or Florida, can still receive a scholarship from an SGO on that state's list.

What Virginians can still do. The credit doesn't depend on where the donor lives. A Virginian can give to an SGO on any participating state's list and claim a dollar-for-dollar federal credit of up to $1,700, or $3,400 on a joint return when each spouse gives, under Treasury's proposed rules (how giving across state lines works). Those scholarships go to students in that state. Virginia's own program, the Education Improvement Scholarships Tax Credit, is separate and isn't affected. Chesapeake's board chair, Kim Scott, described the trade-off in October: “Virginians can still participate,” she said, but their donations “would go to students in other states. I want Virginia dollars in Virginia.”

Can it still change? For 2027 the window to send the list stays open until February 15, 2027, and the election belongs to the governor unless state law names someone else to make it (§ 1.25F-5T(c)(2)). Spanberger's term runs into January 2030, and each year is a separate election, so 2028 is a new decision. HB 359 is due back when the General Assembly meets in January.

Where the other states stand. With Virginia out, our tracker counts 31 participating states, and 15 jurisdictions haven't decided for 2027, among them Pennsylvania, Michigan, Washington and New Jersey. Their advance elections are due January 1, 2027 (where the undecided governors stand), and Washington's Bob Ferguson has said he'll decide before then.

For organizations. If you were building an SGO to serve Virginia students, 2027 now runs through other states' lists. Four states that border Virginia participate: North Carolina, Tennessee, Kentucky and West Virginia. Being “located in” one of them means being authorized to do business there and complying with its charity laws, not having an office there, and a participating state must list every qualifying organization located there that asks (one national standard). The state-by-state application guide covers each one's process and fees, and our free SGO Builder covers the federal steps. The Virginia page will carry any change before February 15.