State SGO Opt-In Status: What We Know As of Spring 2026

Section 25F of the Internal Revenue Code creates a federal tax credit for contributions to state-approved Scholarship Granting Organizations — but only in states that have enacted qualifying opt-in legislation. The state opt-in requirement is one of the most significant structural features of the program, and the variation in state opt-in status is one of the most significant planning challenges for organizations exploring the SGO model.

This post summarizes what we know about state opt-in status as of early 2026. We update our full state tracker tool as new information becomes available.

Important disclaimer: State legislative and regulatory status changes frequently. Nothing in this post should be relied upon as legal advice or as a definitive statement of any state's opt-in status. Verify current status with qualified counsel before making formation decisions.

What "Opting In" Requires

A state opts into the Section 25F program by enacting legislation that:

1. Formally establishes the state's participation in the federal SGO tax credit program 2. Creates a state approval process for SGOs seeking to operate in the state 3. Specifies any state-level requirements beyond the federal minimums 4. Establishes the state's annual reporting requirements for approved SGOs

Some states have preemptively enacted legislation in anticipation of the OBBBA's passage. Others are in the process of developing opt-in legislation. Others have not yet begun the process.

The Landscape as of Early 2026

The states that were most prepared to move quickly on SGO opt-in legislation were generally states with pre-existing school choice infrastructure — states that had already been operating state-level scholarship tax credit programs under their own laws before Section 25F existed.

States with existing scholarship tax credit programs had several advantages in the opt-in process:

• They had administrative infrastructure (state agencies familiar with SGO oversight) already in place
• They had experience with income verification, award process requirements, and annual reporting
• Their legislatures had already approved the general concept of using tax credits to fund private school scholarships
• They had legal frameworks that could be amended to incorporate the federal program requirements

States without pre-existing scholarship tax credit programs face a more complete build-out of their opt-in framework: they need to designate a state agency for SGO approval and oversight, establish an approval process and criteria, develop annual reporting requirements, and pass enabling legislation — all before any SGO in their state can achieve the federal approval needed to accept qualified contributions.

What Organizations in Non-Opted States Should Do

If your state has not yet enacted opt-in legislation, you have three options:

Option 1: Monitor and prepare. Follow your state's legislative session and stay current on the status of any opt-in legislation being considered. Use the time before opt-in to complete your internal formation work — revise governing documents, structure your board, develop your scholarship criteria and application process. When your state opts in and an approval process becomes available, you can move immediately.

Option 2: Partner with an existing SGO in an opted state. Depending on how your state's framework ultimately develops, there may be a path for donors in your state to receive tax credits for contributions to an SGO approved in a neighboring state. This requires careful analysis of your specific state's situation and is not universally available, but it is a path worth exploring with qualified counsel.

Option 3: Form in an opted state where you have program operations. If your organization operates scholarship programs in multiple states, and one of those states has already opted in, you may be able to form and approve your SGO in that state and serve students there while you wait for your primary state to opt in.

The Uncertainty to Plan For

The state opt-in landscape will continue to evolve throughout 2026 and into 2027. Several states that have not yet acted are likely to move during their 2026 legislative sessions. The political momentum behind school choice programs means that the number of opted-in states is likely to grow, not shrink, over the first years of the program.

However, "likely to opt in" is not the same as "has opted in." Organizations should not begin formation planning that depends on their state opting in before that opt-in has actually occurred. Formation takes time, but so does state approval once opt-in legislation passes — a state that opts in in July 2026 is unlikely to have its approval process operational in time to approve SGOs before January 1, 2027.

Planning for 2027 launch in a non-opted state is optimistic unless the opt-in legislation passes with substantial lead time in early 2026. Planning for 2028 launch in a state that opts in during 2026 is more realistic. That does not mean doing nothing — it means using the preparation time wisely.

Our State Tracker

We maintain a continuously updated state tracker at [/resources/state-tracker](/resources/state-tracker) that covers each state's opt-in status, approval process status, any state-specific requirements we are aware of, and our assessment of the likely timeline for states that have not yet acted. The tracker is updated as new information becomes available.

The tracker includes explicit uncertainty ratings for each state — we do not present uncertain information as settled. But having a current, organized view of where each state stands is essential planning information for any organization working through the SGO decision.