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More than half the U.S. States signed up to participate in the federal scholarship tax credit program enacted under the One, Big, Beautiful Bill

IR-2026-76, June 8, 2026

WASHINGTON — The Internal Revenue Service announced that 27 states have elected to participate in the Federal Scholarship Tax Credit (FSTC) program, which enables eligible taxpayers to claim a federal tax credit for qualified contributions to Scholarship Granting Organizations (SGOs) providing scholarships for qualified elementary and secondary education expenses.

For taxpayers to claim the tax credit of up to $1,700, they must contribute to an SGO located in a state that elects to participate in the FSTC program and submits a list of qualified SGOs. State participation in the program, enacted under the One, Big, Beautiful Bill, is voluntary.

“It’s encouraging to see that 27 states have already signed up to participate in this program that promotes and supports elementary and secondary education,” said IRS Chief Executive Officer Frank J. Bisignano. “We are hopeful that additional states will decide to participate.”

As of early 2026 multiple states have formally opted into the program, including: Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.

The IRS will maintain and update the official list of participating states as they complete the required election and submission process. The most current information is available at Federal Scholarship Tax Credit. Some state websites may not yet reflect their current participation status.

For additional information on Section 25F and the FSTC, visit One Big, Beautiful Bill Provisions on IRS.gov.

New York signed up to participate in the Federal Scholarship Tax Credit program (often called the Education Freedom Tax Credit) created under the One Big Beautiful Bill (OBBBA). Governor Kathy Hochul officially opted the state into the program, making New York one of the 27 participating states.

Scholarship Granting Organizations (SGOs) in New York are non-profit 501(c)(3) entities that pool private donations to distribute educational scholarships to eligible students. While New York does not currently offer state-level tax credits for SGO donations, these foundations operate as intermediaries, funding private K-12 education and higher learning. [1, 2]

Prominent scholarship-granting and philanthropic organizations operating in New York include:

• Children’s Scholarship Fund: A major SGO focused on helping low-income families afford tuition for K-12 private and parochial schools. [1, 2, 3, 4, 5]
• The New York Community Trust: Hosts over 150 individual scholarship funds to support students from under-resourced communities, foster care backgrounds, or immigrant families. [1]
• Rochester Area Community Foundation: Manages a wide array of localized scholarships covering everything from K-12 private school tuition to specific higher-education vocational and university paths. [1]
• Marine Corps-Law Enforcement Foundation (MC-LEF): A New York-based SGO that primarily provides educational accounts and scholarships to the children of fallen Marines and federal law enforcement officers. [1]

CMS Launches Nationwide Framework to Implement Medicaid Work Requirements

The Centers for Medicare & Medicaid Services (CMS) released an Interim Final Rule with Comment (IFC) requiring that certain adult Medicaid applicants and enrollees must, as a condition of Medicaid eligibility, meet an 80 hours per month work requirement, through employment, education, work programs, or community service. The rule establishes a nationwide operational framework designed to promote economic stability, self-sufficiency, and independence. 

“The Working Families Tax Cut legislation made historic changes to the Medicaid program, and CMS is working closely with states to put those changes into action,” said CMS Administrator Dr. Mehmet Oz. “This rule helps Americans build skills and independence through work, education, job training, or community service, creating new opportunities for themselves and their families.”

Issued under Public Law 119-21, which CMS refers to as the Working Families Tax Cut (WFTC) legislation, the rule establishes the standards states must use to implement the statutory work requirement, including clear expectations for eligibility determinations, exemptions, verification, and state reporting requirements. It reflects extensive coordination with states and builds on CMS’ ongoing work to modernize eligibility systems and improve beneficiary interactions with states, while improving accountability.

A new study from the Department of Health and Human Services’ Office of the Assistant Secretary for Planning and Evaluation finds the new requirements could reduce poverty by as much as 2.9 million people depending on a variety of conditions such as employment availability.

This rule defines which adults ages 19 through 64 will be required to demonstrate work requirement activities. The rule also defines which individuals are not subject to the requirement because of health-related needs and other qualifying circumstances. These exemptions include, but are not limited to, individuals who are pregnant, postpartum, disabled, medically frail, American Indian or Alaska Native, parents or caregivers of young children and people with disabilities, and those who are already complying with similar requirements through the Supplemental Nutrition Assistance Program (SNAP) or the Temporary Assistance for Needy Families (TANF) program.

The rule also includes state data reporting requirements and establishes requirements for how states must assess and verify compliance and communicate the new requirement to Medicaid applicants and beneficiaries. These provisions are expected to promote transparency, reduce administrative burden, and ensure states provide clear, actionable guidance to new applicants and Medicaid beneficiaries on how to meet the new eligibility requirement. 

CMS is supporting states as they implement the requirement through a combination of federal resources, technical assistance, and private-sector collaboration. This includes $200 million in Government Efficiency Grants authorized under the WFTC legislation to support state system modernization and administrative capacity, as well as more than $600 million in committed support from private-sector technology vendors to help states update eligibility and enrollment systems, and support for outreach to Medicaid beneficiaries. These investments build on CMS’ broader modernization efforts, including expanding the use of automation, data integration, and real-time verification to improve efficiency, strengthen oversight, and enhance the beneficiary experience.

The work requirement must be implemented no later than January 1, 2027, in applicable states, although some states—such as Nebraska —has already implemented, and other states are considering early implementation. 

This rule is being issued with comment period to remain consistent with the legislative directive and implementation timeline established by the WFTC legislation. This approach helps to ensure timely implementation while allowing CMS to continue to collect and consider public feedback.

For a fact sheet on the Medicaid Community Engagement Requirement Interim Final Rule (CMS-2454-IFC), visit: https://www.cms.gov/newsroom/fact-sheets/medicaid-community-engagement-requirement-certain-individuals-interim-final-rule-comment-period-cms.

To view the IFC on the Federal Register, visit: https://www.federalregister.gov.