On October 2, the Department of the Treasury published proposed regulations outlining requirements for the Federal Scholarship Tax Credit (FSTC). Established under the One Big Beautiful Bill Act, the FSTC creates a new federal tax credit for individuals who contribute to eligible scholarship-granting organizations (SGOs). These organizations will distribute scholarships to eligible elementary and secondary students in participating states to cover qualified educational expenses, including for both public and private school students.
ACTE has a longstanding position opposing publicly funded private school voucher programs, because of the way they redirect public resources away from public schools. While we did not support the FSTC for this reason as it was being considered in Congress, now that the program is shifting to an implementation phase and many states have already opted in to participate, ACTE is committed to ensuring that its implementation provides meaningful opportunities for public school CTE students. As regulations are developed, we are focused on expanding access to high-quality CTE programs, clarifying eligible expenses for work-based learning, dual enrollment and industry-recognized credentials, and reducing financial and administrative barriers for students in rural and low-income communities.
Specifically, ACTE is urging the Treasury Department to make the following changes to the proposed regularions:
- Clarify eligible CTE expenses: Explicitly allow scholarships to cover work-based learning costs, dual and concurrent enrollment, industry-recognized credential examinations and CTSO activities, including associated transportation, equipment, and fees.
- Extend student eligibility flexibility to CTE: Expand the proposed income-verification safe harbor to include students pursuing qualifying CTE opportunities, using existing Perkins V program quality standards to help determine eligibility.
- Improve access for rural students: Expand the geographic eligibility criteria for the safe harbor to include school districts with a school-age poverty rate of at least 20%, using the Census Bureau’s Small Area Income and Poverty Estimates (SAIPE).
ACTE also joined a broader coalition effort requesting additional guidance on qualified educational expenses under Section 530 of the Internal Revenue Code. The recommendations emphasize the importance of interpreting eligible expenses broadly to reflect how public schools deliver educational services. Key priorities include clarifying that scholarships can support supplemental instruction, dual enrollment, CTE program fees, transportation, educational technology, and other school-connected learning opportunities.
Comments are due on the proposed regulations by December 1, 2026, and may be submitted electronically through Regulations.gov under docket number REG-117199-25. As Treasury finalizes the regulations, ACTE will continue advocating for policies that recognize the importance of high-quality CTE and ensure students can access the education and training opportunities needed for future success. If you have any questions, please contact ACTE’s Government Relations Manager, Jimmy Koch (jkoch@acteonline.org).
