SECTION 2. BACKGROUND

.01 Overview of § 25F Credit . Section 25F provides a nonrefundable income tax credit (§ 25F credit) allowable to a taxpayer for qualified contributions to an SGO made by an individual who is a citizen or resident of the United States (within

1 Unless otherwise specified, all “section” or “§” references are to sections of the Code or the Treasury Regulations.

2 Revenue Ruling 2025-4 also includes holding (5), and provides transition relief for calendar year 2025 to employers with respect to an amount an employer voluntarily pays of any part of the employee’s otherwise required contribution to a State PFML program (i.e., employer pick-up). This notice does not extend the third component of the transition relief announced in Revenue Ruling 2025-4 to an employer pick-up for calendar year 2026, and consequently, contemplates that employers will treat contribution amounts they voluntarily pay on behalf of their employees to a State PFML program as wages for Federal employment tax purposes under §§ 3121(a), 3306(b), and 3401(a) and report such amounts on the employee’s Form W-2, Wage and Tax Statement, in accordance with § 6051.

1 For purposes of this notice, the term “State” means one of the 50 States or the District of Columbia.

2 Section 25F(c)(1), as added by § 70411 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act, defines a “covered state” as one of the 50 States, or the District of Columbia, that, for a particular calendar year, both voluntarily elects to participate under § 25F and identifies the scholarship granting organizations in the State, in accordance with § 25F(g).

3 Unless otherwise provided, all “section” or “§” references are to sections of the Code.

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the meaning of § 7701(a)(9)). Section 25F(c)(3) defines a “qualified contribution” as a charitable contribution of cash to an SGO that uses the contribution to fund scholarships for eligible students (as defined in § 25F(c)(2)) solely within the State in which the organization is listed pursuant to § 25F(g). In order for a contribution made by a taxpayer to an SGO in a State to be a qualified contribution eligible for a § 25F credit, a State must have voluntarily made an election to participate under § 25F and must have identified the SGO as one that satisfies the requirements of § 25F(c)(5) for the applicable calendar year in accordance with § 25F(g).

.02 Statutory Requirements for Elec- tions to Participate under § 25F . Section 25F(g)(1) provides that a State that voluntarily makes an election to participate under § 25F must provide to the Secretary of the Treasury or the Secretary’s delegate a list of the SGOs that meet the requirements described in § 25F(c) (5) and are located in the State (State SGO list). The State SGO list must be submitted by January 1 of the calendar year for which the election to participate under § 25F is being made (or, with respect to calendar year 2027, as early as practicable). Section 25F(g)(2) provides that each State SGO list must include a certification that the individual, agency, or entity submitting such list on behalf of the State has the authority to perform this function. See sections 2.04 and 3 of Notice 2025-70, 2025-50 I.R.B. 773 (December 8, 2025), for additional information and a request for comments regarding State SGO lists and the certifications necessary for elections to participate under § 25F.

.03 Future guidance . The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to publish future guidance under § 25F(g) on how a State submits its State SGO list with all required certifications. The future guidance will provide that any State making an Advance Election will be required to perfect its election by submitting its State SGO list in accordance with such guidance. Future guidance also will address how to make an election to participate under § 25F for calendar year 2027 at the same time the State submits the State SGO list, and how to make elections

(including Advance Elections) to participate under § 25F for subsequent calendar years.