Understanding the New Federal Tax Credit for Contributions to Scholarship Granting Organizations

On November 25, 2025, the Department of the Treasury and the Internal Revenue Service (IRS) announced a new federal tax credit for individuals who contribute to scholarship granting organizations as part of the One, Big, Beautiful Bill. This initiative aims to support educational opportunities by incentivizing donations to organizations that provide scholarships to students.

The IRS has issued Notice 2025-70, requesting public comments on how to implement this tax credit effectively. This is an important development for taxpayers in Hilo and across the Big Island, as it opens new avenues for tax planning and charitable giving.

What is the Tax Credit?

The new tax credit allows individuals to receive a credit against their federal income tax for contributions made to qualifying scholarship granting organizations. This credit is designed to encourage more contributions, ultimately benefiting students who need financial assistance to pursue their education.

How Does It Work?

To qualify for the tax credit, contributions must be made to organizations that meet specific criteria set by the IRS. The details of these criteria are still being finalized, and the IRS is seeking input from the public on how to best structure the program.

Benefits for Taxpayers

For taxpayers in Hilo, this tax credit can provide a significant financial benefit. By contributing to scholarship granting organizations, individuals can not only support local education initiatives but also reduce their overall tax liability. This dual benefit makes it an attractive option for those looking to give back to their community.

Considerations for Small Business Owners

Small business owners in Hilo may also find this tax credit beneficial. If you are considering making contributions to support local education, this credit can enhance your tax planning strategy. However, it is important to ensure that any contributions are made to qualifying organizations to receive the credit.

Next Steps

As the IRS finalizes the details of this tax credit, taxpayers should stay informed about the requirements and implementation timeline. Engaging with local tax professionals can also provide clarity on how to take advantage of this new opportunity.

Official Sources

For more information, you can visit the IRS Newsroom.