As detailed below, the Treasury Department has issued previews of two important forthcoming guidance projects, one relating the Internal Revenue Code section 25F (the tax credit for donations to scholarship granting organizations) and the other relating to section 4960 (the tax on excess tax-exempt organization compensation, which the OBBBA amended). This activity raises a larger question, however: why are we getting previews and not actually proposed regulations? While some advance notice is better than none, it may indicate – which I have not tried to confirm empirically – that Treasury is behind in getting guidance out for workload and staffing reasons.
The section 25F preview states it is expected to help affected states, organizations, and taxpayers to prepare for the availability of the credit in the 2027 tax year, with proposed regulations available by the end of September 2026. It points to remarks from a Treasury official for key issues to be addressed by those regulations. As of June 22nd, 28 states have made an advance election to participate. Almost are are Republican controlled or leaning states, but there is an ongoing debate regarding whether Democratic controlled and leaning states should also participate despite their long-standing support of public education and skepticism of school voucher programs. See, e.g., The74 opinion; Third Way opinion.
The section 4960 preview (IRS Notice 2026-36) flags issues to be addressed in proposed regulations, including the effective date of the expanded covered employee definition (changed from the top five highest compensated employees to all employees) and exceptions to that definition. More specifically, they indicate the intent to continue the existing limited hours and nonexempt funds exceptions in similar form to their current form in the existing section 4960 regulations.