A Letter from Patrick Mason: What the Proposed Scholarship Rules Mean for Your Schools

We are excited to share that the IRS released its proposed rules this morning for the Federal Scholarship Tax Credit. Here is a brief overview of the most relevant provisions:

• Donor benefit: Donors receive a dollar-for-dollar federal tax credit of up to $1,700 per person, or $3,400 for a married couple filing jointly, for gifts made on or after January 1, 2027.

• Which states qualify: Scholarship recipients must live in a state that has opted in. Thirty states have opted in for 2027 so far (link). A student, however, may spend those scholarship funds at a school they attend in another state, even if that other state has not opted in.

• Who qualifies: Students from households earning up to 300% of their area's median income are eligible as determined by HUD guidelines to be later published. The IRS estimates this covers about 95% of children nationwide.

• Protection for Catholic schools: Participating states may not limit the types of schools families choose, or the qualified expenses scholarships can cover.

• Returning students and siblings: Scholarships give priority to students who received a scholarship the previous year, then to their siblings. That gives families continuity from year to year.

• Who selects recipients: Anyone who takes part in selecting scholarship recipients, along with their family members, is ineligible to receive a scholarship. This should not be a problem for most of you because our system does the actual selection automatically based on the criteria that each school puts in.  

• Next steps for the rules: These rules are proposed and may change before they are final. The public comment period runs about 60 days, and a public hearing is scheduled for December 15, 2026.

Now that the rules are out, we will begin updating our technology platform to be fully compliant. By the end of the month or sooner, we will begin turning it on for everyone who has completed onboarding. A video walkthrough of the platform is below.

Thank you for supporting our mission to spread Catholic education throughout the nation. We look forward to seeing what this opportunity will mean for your families.

With gratitude in the Month of the Holy Rosary, and on the Feast of Saint, Thérèse of Lisieux,

‍

Patrick Mason
Catholic Education Fund