New York governor opts state into education tax credit program — Fortune
New York Governor Kathy Hochul has opted the state into the federal Education Freedom Tax Credit program, which provides tax credits for cash donations to educational scholarships. New York became the 31st state to join the program and the second to be opted in by a Democratic governor, after Colorado, Fortune reports.
Hochul said she did not want to turn down funds that could help children. At the same time, she stressed that the state would participate only if all schools and students, including public school students, benefit.
How the tax credit will work
The program was created by the One Big Beautiful Bill Act, signed by U.S. President Donald Trump in July 2025. Starting January 1, 2027, taxpayers will be able to receive a federal tax credit of up to $1,700 for cash donations to approved scholarship-granting organizations. The proposed rules provide that married couples filing jointly will be able to receive up to $3,400 in total.
The tax credit reduces federal tax revenues but is not funded by state budgets. Governors must confirm participation annually for students in their states to be eligible for scholarships. At the same time, taxpayers may donate to organizations in participating states regardless of where they live.
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Terms and reaction
In New York, students from families whose income does not exceed 300% of the median gross income for the relevant area will be eligible for scholarships. City Journal estimates that this amounts to about $309,000 in the Bronx and $510,000 in Westchester County. The publication also estimates the number of potential participants at more than 2.7 million students.
Scholarships may be spent on tuition at private and religious schools. Public school students will be able to pay for tutoring, special education services, books, and technology. The Scholarships for All New Yorkers coalition, citing an Education Reform Now projection, said the program could provide New York students with $1.5 billion per year if one-third of taxpayers eligible for the credit participate.
Democratic leaders in the state legislature urged Hochul to decline participation. In particular, they said federal rules could limit New York's ability to establish safeguards and control which schools, expenses, and types of funding would fall under the program. The state's largest teachers' union, New York State United Teachers, called it a private-school voucher program.
The U.S. Treasury Department forecasts that nearly $26 billion in donations could flow through the program annually by 2030. At the same time, the U.S. Congress's Joint Committee on Taxation estimates lost tax revenues at $25.9 billion over 10 years.
