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New York is set to become the 30th state to opt into a landmark federal scholarship tax credit program, marking a significant policy shift for Gov. Kathy Hochul, D., and making New York the second Democratic-led state to embrace the initiative.
The announcement came via a post on X from U.S. Education Secretary Linda McMahon, who praised the move. “Governor Hochul has indicated she will opt-in to the Education Freedom Tax Credit — what a win for students and families across New York!” McMahon wrote.
A spokesperson for Hochul’s office confirmed with Fox News Digital that the governor intends to opt in to the program.
“Governor Hochul is supportive of the federal tax credit scholarship and its potential to help New York students and schools. Our office awaits information from the federal government on the program and will thoroughly review the details of the policy for poison pills that could harm New York’s education system,” the spokesperson said.
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The program, officially known as the Federal Scholarship Tax Credit (FSTC), was signed into law in July 2025 as part of the “One Big Beautiful Bill” Act. Unlike traditional federal grants, this policy relies on individual governors to “opt in” before their residents can claim the benefits.
Under the guidelines, individual taxpayers can receive a dollar-for-dollar federal income tax credit of up to $1,700 for donations made to Scholarship Granting Organizations (SGOs). These organizations then distribute the funds to families with incomes up to 300% of their area’s median gross income, helping them cover private tuition, tutoring, or specialized educational services. While the opt-in is happening now, the first round of tax-credited donations is slated to begin on January 1, 2027.
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For years, “school choice” has been a third-rail issue for Democrats, who often argue that such programs siphon vital funding away from traditional public schools and undermine teacher unions. However, the tide appears to be turning.
Colorado Governor Jared Polis became the first Democrat to break ranks, opting his state into the program in January 2026. Polis dismissed critics at the time, telling local media he “would be crazy not to” join, noting the credit would empower parents to afford after-school or summer programs that were previously out of reach.
New York’s entry brings the total number of participating states to 30. This momentum follows months of pressure from McMahon, who previously told “The Faulkner Focus” in March that any refusal to join was purely partisan.
“I do believe that’s the only reason [they would refuse],” McMahon said. “Why any governor would not opt into this is absolutely anathema to me.”
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Proponents of the policy are hailing Hochul’s decision as a generational victory for New York families.
“Finally, school choice is coming to New York, thanks to the courage of Governor Hochul and the tremendous advocacy of countless families,” Tommy Schultz, CEO of the American Federation for Children (AFC), told Fox News Digital. “We celebrate alongside every family who will soon, finally, have a chance to access an education that meets their children’s needs.”
Critics, including several prominent New York teacher unions, remain skeptical. They have raised concerns over the lack of federal oversight for private institutions and the potential for the program to widen equity gaps in the state’s education landscape.
While New York has filed its intent to participate, the IRS is currently finalizing the regulatory framework. A public comment period is expected later this year before the program officially goes live for the 2027 tax year.
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