Federal Scholarship Tax Credit
Federal Scholarship Tax Credit: What It Means for New York Families
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Will Governor Hochul Opt In?
A new federal program could dramatically expand educational opportunities for families across the country—including in New York. This program would help ease the burden on tuition-paying families at Catholic and other private schools, while also supporting public schools through a broad array of services. But whether New York families benefit depends on one key decision: will Governor Kathy Hochul opt the state into the program?
What Is the Federal Scholarship Tax Credit?
The federal scholarship tax credit is a new initiative designed to help families access the educational options that best meet their children’s needs. The program allows taxpayers to receive a 100% federal tax credit of up to $1,700 for donations made to nonprofit Scholarship Granting Organizations (SGOs). These organizations then distribute the funds as scholarships to eligible students. Any American taxpayer who owes federal income tax can qualify for this credit and redirect up to $1,700 to a SGO instead of paying that amount to the IRS. Unlike many government programs, this initiative relies on private donations rather than government spending.
Scholarships could be used for a variety of educational needs, including:
- • School tuition
- • Tutoring
- • Special education services
- • Education technology
- • Academic supplies and other educational supports
The program has the potential to benefit millions of students nationwide if states choose to participate.
Who Could Qualify?
Eligibility for scholarships extends to families earning up to 300% of the regional median income, which could include more than 90% of K–12 students in many areas.
Why It Matters for New York
If New York participates, the program could unlock millions of dollars in privately funded scholarships for students.
These scholarships could help:
- • Make tuition more affordable for families
- • Expand access to educational options
- • Support both public and private educational services
- • Strengthen long-term financial stability for schools
For many families, scholarships could make the difference between having educational options and having none.
When Would the Program Start?
The federal scholarship tax credit is scheduled to take effect January 1, 2027.
The Key Question: Will New York Opt In?
The federal law requires each state to opt into the program. To participate, a governor must submit a list of approved Scholarship Granting Organizations (SGOs) to the U.S. Treasury Department each year. If New York does not opt in, taxpayers could still donate and receive the federal tax credit, but their donations must go to scholarship organizations in other states, benefiting students elsewhere instead of New York families. Whether New York families benefit rests solely on Governor Kathy Hochul.