A new federal tax credit program is giving taxpayers in 27 states an opportunity to support education while reducing their federal tax bill. 

The Federal Scholarship Tax Credit (FSTC) program allows eligible taxpayers to receive a federal tax credit for contributions made to approved Scholarship Granting Organizations (SGOs). These organizations provide scholarships that help students cover qualified elementary and secondary education expenses. 

How the Program Works

Taxpayers can claim a federal tax credit of up to $1,700 by making a qualified contribution to an approved SGO in a participating state.

To qualify:

• The contribution must be made to an approved SGO.
• The SGO must be located in a state participating in the FSTC program.
• The state must submit its list of qualified SGOs to the federal government.

Participation in the program is voluntary, meaning each state chooses whether to opt in.

Growing State Participation

According to the announcement, 27 states have already elected to participate in the program, reflecting growing support for educational scholarship initiatives. 

Officials say the program is designed to expand educational opportunities by helping scholarship organizations fund students’ educational needs. IRS leadership has welcomed the strong initial participation, noting that the program supports elementary and secondary education by expanding scholarship opportunities for students.

Participating States

As of early 2026, the following states have formally opted into the FSTC program:

• Alabama
• Alaska
• Arkansas
• Colorado
• Florida
• Georgia
• Idaho
• Indiana
• Iowa
• Louisiana
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• North Dakota
• Ohio
• Oklahoma
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Virginia
• West Virginia
•  Wyoming

Looking Ahead

The IRS will continue updating the official list of participating states as more states complete the enrollment process. Taxpayers interested in claiming the credit should verify that their state and chosen SGO are approved before making a contribution.

For families, donors, and education advocates, the FSTC program represents a new way to support student scholarships while receiving a valuable federal tax benefit.

The IRS is accepting applications for its 2027 Low Income Taxpayer Clinic (LITC) matching grant program. Eligible organizations can apply between May 6 and July 6, 2026, for funding to help low-income taxpayers and individuals with limited English proficiency resolve tax issues and understand their rights. The grant period runs from January 1 through December 31, 2027.

What Qualifies Low Income Taxpayer Clinics?

Administered by the Taxpayer Advocate Service (TAS), LITCs operate independently from the IRS and provide:

• Free or low-cost representation in tax disputes with the IRS
• Tax education for taxpayers whose first language is not English
• Advocacy on issues affecting low-income and ESL taxpayers

According to National Taxpayer Advocate Erin M. Collins, the clinics are a “lifeline” for taxpayers who need help accessing a fair and just tax system.

Funding Details

Organizations may request up to $200,000 for the 2027 grant year. The grants require a dollar-for-dollar match, meaning recipients must contribute an amount equal to the IRS award.

Applications must be submitted electronically by 11:59 p.m. ET on July 6, 2026.

Focus on Underserved Areas

The IRS will give special consideration to applications serving underserved communities, particularly in:

• Hawaii
• Kansas
• Montana
• West Virginia
• Wisconsin

Additional priority will be given to organizations proposing services in counties across Florida, Nevada, and South Dakota where taxpayer clinic coverage is limited or unavailable. The agency is also especially interested in proposals that expand access through community partnerships, referral networks, and ESL outreach programs.

Key Deadline

Organizations interested in applying must submit their applications by July 6, 2026. The funding opportunity number is TREAS-GRANTS-042027-001.

The program aims to expand access to tax assistance and ensure more taxpayers receive the representation, education, and support they need to navigate the tax system successfully.

The Department of the Treasury and the Internal Revenue Service (IRS) have issued final regulations implementing the “No Tax on Tips” provision under the One, Big, Beautiful Bill. These rules clarify which workers qualify and what constitutes “qualified tips” eligible for a tax deduction.

Overview of the Final Regulations

After receiving over 300 public comments and holding a hearing in October 2025, the IRS finalized guidance to ensure consistent application of this tax benefit. The regulations are designed to support a wide range of tipped workers and provide clearer rules for compliance.

Occupations Eligible for Tip Deduction

The final regulations identify more than 70 tipped occupations using the Treasury Tipped Occupation Code system. These roles are grouped into eight categories:

• 100s – Beverage and Food Service
• 200s – Entertainment and Events
• 300s – Hospitality and Guest Services
• 400s – Home Services
• 500s – Personal Services
• 600s – Personal Appearance and Wellness
• 700s – Recreation and Instruction
• 800s – Transportation and Delivery

Notably, the final rules expand eligibility to include visual artists and floral designers (personal services) and gas pump attendants (transportation and delivery).

What Counts as “Qualified Tips”?

To claim the deduction, tips must meet specific criteria:

• Form of Payment: Must be cash or cash equivalents (e.g., credit/debit card, checks, gift cards, or mobile payments)
• Source: Must come directly from customers or through tip-sharing arrangements (e.g., tip pools)
• Voluntary Nature: Must be freely given by the customer

Importantly, mandatory service charges do not qualify unless customers have the option to modify or decline them.

Reporting Requirements

Only tips that are properly reported are eligible for the deduction. This includes tips recorded on:

• Form W-2
• Form 1099-NEC
• Form 1099-MISC
• Form 1099-K
• Form 4137 (for unreported tips)

Both employees and self-employed individuals, including gig workers, may qualify if they meet all requirements.

Special Consideration for Self-Employed Individuals

For self-employed taxpayers, the deduction is limited to their net income, preventing the deduction from exceeding business earnings.

Key Takeaway

The final “No Tax on Tips” regulations provide expanded opportunities for workers across multiple industries while setting clear standards for what qualifies. Proper classification, documentation, and reporting are essential to fully benefit from this provision.

For guidance on eligibility or claiming this deduction, consulting a tax professional can help ensure compliance and maximize available benefits.

As the April 15 deadline approaches, taxpayers who need more time to complete their federal returns can request an extension to file until October 15, 2026. However, the extension request must be submitted by April 15, 2026 to avoid penalties.

Extension to File vs. Time to Pay

An extension provides additional time to file, not to pay.

To avoid penalties and interest:

• Estimate your total tax liability
• Subtract payments already made (withholding or estimated payments)
• Pay any remaining balance by April 15

How to Request an Extension

The IRS offers several simple options:

• IRS Free File: Submit an extension electronically at no cost
• Free File Fillable Forms: Complete and e-file Form 4868
• Pay Online: Use IRS Direct Pay, Online Account, or EFTPS and select “extension”
• Mail Form 4868: Submit a paper form if preferred

Paying online and selecting “extension” automatically grants the extension—no additional form required. Be sure to keep your confirmation.

Automatic Extensions for Certain Taxpayers

Some individuals receive extra time automatically:

• Military stationed abroad: File by June 15 (payment still due April 15)
• Combat zone service members: At least 180 days after service ends
• Taxpayers living abroad: Automatic extension to June 15 (interest applies after April 15)
• Disaster-affected taxpayers: Additional time granted automatically in qualifying areas

Payment Options

Available IRS payment methods include:

• IRS Online Account
• Direct Pay
• Electronic Federal Tax Payment System (EFTPS)
• Credit/debit card or digital wallet

Key Takeaway

Filing an extension can help you submit a more accurate return, but it does not delay your payment obligation. Ensuring you pay what you owe by April 15 is essential to minimizing penalties and interest.

If you need help estimating your tax liability or filing an extension, consult a qualified tax professional to stay compliant and avoid surprises.