New York Joins Federal Education Tax Credit Program
Governor Kathy Hochul announced that New York will participate in the federal Education Freedom Tax Credit program.
Updated on Oct. 22, 2026 in Financial Aid
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New York has become the 31st state to opt into the federal Education Freedom Tax Credit program. The initiative allows taxpayers to claim credits for donations made to approved scholarship-granting organizations to help students with tuition and educational expenses.
Why it matters
Governor Kathy Hochul chose to join the program to ensure New York students receive the benefits available under the initiative rather than leaving federal funding on the table. The program could generate $1.5 billion annually for local students if one-third of eligible taxpayers participate.
Eligible taxpayers can claim a dollar-for-dollar credit of up to $1,700 for individual filings or $3,400 for married couples filing jointly. Students from households earning up to 300% of their area median income qualify for the scholarships.
The players
Kathy Hochul
Kathy Hochul is the Governor of New York who authorized the state to join the federal program.
Jared Polis
Jared Polis is the Governor of Colorado and the only other Democratic governor currently participating in the program.
Donald Trump
Donald Trump is the President of the United States who signed the One Big Beautiful Bill Act into law.
The details
Under the program established by the One Big Beautiful Bill Act, scholarships can cover private and religious school tuition for eligible students. Public school students may also use the funds for technology, tutoring, and special education services.
Timeline
President Trump signed the One Big Beautiful Bill Act into law in July 2025.
Governor Kathy Hochul announced New York would participate on October 9, 2026.
The deadline for submitting public comments on proposed rules is December 1, 2026.
A public hearing on the program is scheduled for December 15, 2026.
Taxpayers can officially begin claiming the federal credit on January 1, 2027.
Culture Shift
New York's participation in the One Big Beautiful Bill Act signals a pragmatic pivot toward expanding school choice options through federal tax mechanisms. This move reflects a broader national trend where state leaders are increasingly leveraging federal tax credits to augment local education funding.
Taxpayers in New York will soon be able to reduce their federal tax liability by donating to scholarship organizations that support local students. Families meeting the income threshold can prepare to apply for these scholarships as the program becomes operational next year.
The takeaway
Eligible residents should track the upcoming IRS public hearing in December to understand how to maximize these potential tax credits. Participating in the program may allow families to offset significant costs for private tuition or essential educational support services.
Further reading
For more information on state policies, visit the New York Financial Aid section.
Source note: This article includes information reported by Fortune.
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