New York Governor Kathy Hochul has opted the state into the Trump administration's Education Freedom Tax Credit, breaking with the Democratic leaders of both legislative chambers and making New York the 31st state to join the first nationwide federal school choice program. 'I'm not going to leave money on the table when it could help our kids,' Hochul said in her Oct. 9 announcement. She is only the second Democratic governor to join, after Colorado Gov. Jared Polis.
The federal tax credit, created under the One Big Beautiful Bill Act signed in July 2025, takes effect on Jan. 1, 2027. It allows taxpayers a dollar-for-dollar credit of up to $1,700 for cash donations to approved scholarship-granting organizations, or SGOs. Married couples filing jointly can claim up to $3,400 combined. The credit reduces federal tax revenue and does not draw on state budgets, though governors must opt in each year for students in their state to receive scholarships.
Hochul's Oct. 9 announcement came days after Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins urged her to stay out. Heastie argued New York should continue investing in the public schools that educate the overwhelming majority of children. Stewart-Cousins warned the federal rules would undercut New York's ability to establish meaningful guardrails over how the funding is used. The move also lands weeks before Election Day, as Hochul faces a challenge from Republican nominee Bruce Blakeman, who has criticized her for not opting in sooner.
Under proposed regulations, students are eligible if their household income is no more than 300% of their area's median gross income, reaching roughly $309,000 in the Bronx and $510,000 in Westchester County. The Scholarships for All New Yorkers coalition projects the program could generate $1.5 billion a year for New York students if a third of eligible taxpayers participate. Scholarships can cover private and religious school tuition, as well as expenses such as tutoring and special education services for public school students.
Critics, including the New York State United Teachers union, have called it 'President Trump's private-school voucher program.' The union argues the high income limits make it more a tax break for the wealthy than an education program. Beatriz Beckford of MomsRising said the program takes federal tax money and hands it to private schools with no rules about who they must admit or how they account for it. Supporters, including Catholic and Orthodox Jewish school advocates and Democrats for Education Reform, praised the move. Nationally, the Treasury projects more than 11 million taxpayers could donate nearly $26 billion a year through the program by 2030, though the Joint Committee on Taxation estimates a $25.9 billion revenue cost over a full decade. The remaining states have until Jan. 1, 2027, to decide whether to join.
Analysis
Why This Matters
- New York's participation as a large, Democratic-led state gives the federal school choice program significant political and financial weight, potentially encouraging other holdout states to join.
- The decision puts Governor Hochul directly at odds with her party's establishment and powerful union allies, injecting a bipartisan appeal into her re-election campaign ahead of Election Day.
- The program could inject billions of dollars into private and religious education in New York, reshaping the landscape of the state's education system over the long term.
Background
The Education Freedom Tax Credit was created under the One Big Beautiful Bill Act, signed into law by President Trump in July 2025. It offers a federal tax credit for donations to scholarship-granting organizations, effectively subsidizing private and religious school tuition. Governors must opt in annually for their states' students to receive scholarships, though taxpayers anywhere can donate to SGOs in participating states. The program represents a significant federal shift toward school choice, transferring tax revenue into private education markets while bypassing traditional state-level public school funding mechanisms.
Key Perspectives
Governor Kathy Hochul: Argues the state cannot afford to turn down federal dollars and that the program benefits public school students by covering tutoring, special education, and technology. She is the second Democratic governor to opt in.
Democratic Legislative Leaders: Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins oppose the program, arguing New York should focus on funding its public schools and that the program provides insufficient state oversight over qualifying expenses.
Teachers Unions and Education Advocates: The New York State United Teachers union and groups like MomsRising criticize the program as a voucher scheme that lacks accountability for private schools and functions as a tax break for high-income households.
School Choice Supporters: Catholic and Orthodox Jewish school advocates, along with groups like Democrats for Education Reform and the American Legislative Exchange Council, celebrate the move as a victory for parental choice and educational equity.
What to Watch
- Governor Hochul's re-election race, where Republican nominee Bruce Blakeman has positioned himself as more enthusiastic about the program.
- The outcome of the Treasury and IRS public comment period, which ends Dec. 1, with a public hearing on Dec. 15.
- Which of the remaining 19 states will opt in by the Jan. 1, 2027 deadline, and whether any states that opted in later reverse course.