; and (B) shall use not less than 95 percent of the subgrant funds to provide qualifying scholarships for qualified expenses only to eligible students who reside in the State in which the eligible scholarship-granting organization is recognized. (d) Reallocation A State shall return to the Secretary any amounts of the allotment reserved under this Act that the Governor does not award as subgrants under subsection (c) within 120 days of receipt of that allotment, and the Secretary shall reallocate such funds to the remaining eligible States. (e) Rules of construction (1) Education providers that accept scholarship funds from students under this section shall not, by reason of such participation, be considered recipients of Federal financial assistance, nor shall they, by reason of such participation, be required to comply with provisions of federal law not otherwise in effect as of the date of the passage of this Act. (2) The rules of construction under section 25E(d) of the Internal Revenue Code of 1986, as added by section 201, shall apply to this section in the same manner as such rules apply to section 25E of such Code, as so added. II Tax credits for contributions to eligible scholarship-granting organizations 201. Tax credits for contributions to eligible scholarship-granting organizations (a) Credit for individuals Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding after section 25D the following new section: 25E. Contributions to eligible scholarship-granting organizations (a) Allowance of credit Subject to section 202(c) of the School Choice Now Act , in the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of any qualified contributions made by the taxpayer during the taxable year. (b) Amount of credit The credit allowed under subsection (a) for any taxable year shall not exceed 10 percent of the taxpayer’s adjusted gross income for the taxable year. (c)