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Gov. Kathy Hochul said New York will participate in a federal scholarship tax credit program, which allows taxpayers to claim a federal tax credit for donations to scholarship-granting organizations. Supporters say the program could benefit public school students as well as families seeking private-school tuition help, but the amount New York students may receive and how the funds will be distributed remain unclear.
New York Gov. Kathy Hochul said Friday that the state will participate in a new federal scholarship tax credit program, a decision that could let scholarship organizations raise money for education expenses while drawing criticism from teachers’ union officials. Hochul said the program has the potential to generate millions of dollars for New York students, including public school students, though the amount and distribution of any funds are not yet clear.
The program was created through the One Big Beautiful Bill Act, backed by President Donald Trump and passed last year. Beginning Jan. 1, individual taxpayers will be able to donate up to $1,700 to a scholarship-granting organization and claim a dollar-for-dollar federal tax credit. Those organizations can then provide scholarships for qualifying families’ tuition or other education expenses.
Taxpayers in any state can donate, but a governor must opt in each year for students in that state to benefit and for scholarship groups to operate there. The Treasury Department released rules last week. Hochul had previously said she was waiting for those rules before deciding whether to join, citing concern about a possible “poison pill” in the program.
Hochul said the decision followed a review of the federal regulations. The report by The 74 said the rules describe ways public school students may benefit, particularly through tutoring, but leave many implementation questions unanswered. The governor cannot choose which organizations receive funds or require that participating scholarships go only to low-income students. Families earning up to 300% of area median income are eligible under the program.
How New York Students Could Benefit
New York’s participation makes the state eligible for a federal tax-credit mechanism that supporters say could help families pay for education expenses without drawing directly on state or local school budgets. The design is primarily aimed at expanding private-school choice, but the program also creates avenues for support to public school students. That distinction is central to the debate over what opting in will mean in practice.
Hochul’s decision also carries political weight beyond New York. She is the second Democratic governor, after Colorado’s Jared Polis, to opt in voluntarily. School-choice advocates have viewed her choice as a possible example for other Democratic governors still weighing the program. The decision may shape the debate over whether states can use the federal program to support students while retaining control over their public education systems.
For families, the practical impact will depend on which scholarship organizations operate in New York, what expenses they cover and how much donors contribute. The source report says the state cannot limit participating organizations based on religion or LGBTQ status, or restrict scholarships to low-income families. Those terms have helped fuel opposition from unions and civil-rights groups.
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A Federal Program Facing State Choices
The scholarship tax credit is part of a long-running effort by school-choice supporters to use federal tax policy to expand families’ education options, including in states that do not have voucher programs. Supporters have argued that scholarships can assist families whose children attend schools with weak academic outcomes, including lower-income Black and Latino families. Those are arguments made by advocates, not established outcomes of the new program.
According to an IRS tracker cited by The 74, 30 other states had opted in at the time of the report. In Kentucky, North Carolina and Kansas, Republican-controlled legislatures overrode Democratic governors’ vetoes to join. Other Democratic governors have declined or said they are still reviewing the rules. New York’s choice follows weeks of pressure from both sides: civil-rights organizations and union officials urged Hochul to opt out, while school-choice groups and religious-school leaders urged her to participate.
Hochul’s announcement formalizes an intention she had already signaled, but it does not settle how the program will work for New York families. The federal rules establish eligibility and the tax-credit structure; local participation will depend on scholarship organizations and the donations they attract.
“I’m not going to leave money on the table when it could help our kids.”
— Gov. Kathy Hochul
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Funding and Delivery Remain Unclear
The state’s participation does not establish how much money New York students will receive. The source report says the logistics of directing funds to public school students and the total amount that could be raised remain uncertain. The actual sums will depend in part on donations to scholarship-granting organizations and how those groups award scholarships.
It is also not yet clear which organizations will operate in New York, what share of scholarships will support public school students, or how families will access services such as tutoring. The federal rules do not give Hochul authority to select or exclude recipient groups, according to The 74’s report. The source material does not provide a timeline for state-level implementation beyond the program’s Jan. 1 start for taxpayer donations.
The governor’s decision does not resolve the broader dispute over whether the program will complement public education or channel resources toward private-school choice. Supporters and critics have offered competing predictions; the eventual effects on New York students and schools are not yet established.
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Donations Begin January 1
Individual taxpayers can begin making eligible donations on Jan. 1, after which scholarship organizations can distribute aid under the federal program. New York’s participation must be renewed annually, so the state’s status will be subject to future decisions.
The next practical developments will include which scholarship groups seek to operate in New York, how they explain eligibility and education expenses to families, and whether public school students receive support for services such as tutoring. The source report does not identify a specific state agency timetable or a first date for scholarship awards. Families, educators and state officials will have to wait for those operational details to see how the opt-in translates into available assistance.
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Key Questions
What did Gov. Kathy Hochul decide?
Hochul said New York will participate in the federal scholarship tax credit program. The state must opt in each year for its students to benefit.
How does the federal tax credit work?
Starting Jan. 1, individual taxpayers can donate up to $1,700 to a scholarship-granting organization and claim a dollar-for-dollar federal tax credit. The organizations can use donations for scholarships covering qualifying families’ tuition or other education expenses.
Can public school students benefit?
Supporters say they can, including through tutoring and other services. The available source does not specify how much money will reach public school students or how organizations will distribute it.
Why are teachers’ unions opposed?
United Federation of Teachers President Michael Mulgrew criticized the decision as giving up local control and called the program a private-school voucher scheme. Union officials and civil-rights groups had urged Hochul to opt out.
What remains unknown about New York’s participation?
The amount of money that will be raised, which scholarship organizations will operate in the state, how awards will be allocated and when families can receive assistance are not yet clear.
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