Section 25F FAQ & Disclaimer
Disclaimer: This page is for educational purposes only and summarizes proposed federal Section 25F rules as of October 2026. The rules may change, and state requirements can differ. Always verify the most current federal and state guidance and consult your own advisors before acting.
Are the Section 25F rules final?
Treasury and IRS published temporary regulations T.D. 10057 and proposed regulations REG-117199-25 on October 2, 2026. The temporary regulations are effective December 1, 2026 and apply on or after September 1, 2026. The comprehensive operational rules are proposed and may change; verify current guidance.
Is Section 25F language required in the Articles?
Current guidance does not mandate a specific Section 25F clause in the Articles. Standard compliant 501(c)(3) articles, together with bylaws, policies, and actual operations, must support Section 25F compliance.
What is the 85% safe harbor?
85% is the scholarship-granting activity threshold. Under the proposed safe harbor, a qualifying single-State SGO may apply key operational rules at its segregated Section 25F account.
What does the 90% rule apply to?
90% is the scholarship spending test. Under the proposed safe harbor, a qualifying single-State SGO may apply the test at its segregated account; otherwise the proposed rule generally measures total gross receipts organization-wide.
Is an annual audit required?
SGO IRS portal registration before January 1, 2027; 2027 advance-election State SGO lists by February 15, 2027; donor acknowledgments by January 31 after the contribution year; and IRS portal donor reporting by February 28.