New York Joins Federal Scholarship Tax Credit Program

New York is set to become the 30th state to join a new federal scholarship tax credit program. This is a notable policy development for Governor Kathy Hochul, marking New York as the second blue state to embrace this initiative.

The announcement came via a post on X from U.S. Secretary of Education Linda McMahon, who expressed her support for the decision. “Governor Hochul has indicated his intention to opt in to the Education Freedom Tax Credit. What a huge win for students and their families across New York!” she wrote.

A representative from Hochul’s office confirmed to Fox News Digital that the governor is indeed opting into the program. “Governor Hochul believes in the potential of federal tax credit scholarships to assist New York’s students and schools. We are waiting for further information from the federal government about this program and will carefully assess the details, especially for anything that might negatively impact New York’s education system,” the spokesperson stated.

The Federal Scholarship Tax Credit (FSTC), established in July 2025, requires governors to opt in before residents can take advantage of its benefits. Taxpayers may receive a federal income tax deduction of up to $1,700 for every dollar contributed to a scholarship-granting organization (SGO). These organizations help families with incomes up to 300% of the area’s median gross income cover costs associated with private schooling, tutoring, or other educational services. While opt-in is currently available, the first round of tax-deductible donations is set to kick off on January 1, 2027.

For years, school choice has been a contentious issue, especially for Democrats, who often argue that such initiatives take money away from public schools and undermine teachers unions. However, things may be shifting. Colorado’s Governor Jared Polis was the first Democratic governor to sign on to the program back in January 2026, highlighting the empowerment it provides to families and students.

New York now brings the count of participating states to 30, following pressure on Democratic officials from McMahon, who previously suggested that refusal to join was more political than practical. “I believe that is the only reason [they would refuse]. The governor’s reluctance to support this is quite upsetting,” McMahon commented.

Supporters of the program, including leaders from the American Federation for Children, praise Hochul’s choice as a substantial win for families in New York. “Thanks to Governor Hochul’s courage, we finally have school choice in New York,” remarked AFC CEO Tommy Schultz.

On the flip side, critics, including several New York teachers’ unions, are wary. They worry about the absence of federal oversight concerning private educational institutions and believe the program could exacerbate existing inequities in the state’s education system.

While New York has expressed its intent to participate, the IRS is still in the process of finalizing the regulatory aspects of the program. A public comment period will be held later this year before the official launch for the 2027 tax year.