Governor Kathy Hochul said earlier this year that New York would participate in a new federal scholarship program. Now, as powerful teachers’ unions push back, New York has yet to formally opt in.
Earlier this year, New York families received encouraging news: Governor Kathy Hochul stated that New York would participate in the new federal Education Freedom Tax Credit (EFTC).
That decision could open significant new educational opportunities for New York students starting in 2027.
But months later, New York has not yet appeared on the IRS list of states that have formally opted to participate. Meanwhile, some of the most powerful political forces in Albany are urging the Governor to reconsider.
What Is the Education Freedom Tax Credit?
Beginning January 1, 2027, the EFTC will offer taxpayers a federal tax credit of up to $1,700 for qualifying cash contributions to Scholarship Granting Organizations (SGOs).
Those nonprofit organizations can use the contributions to award scholarships to eligible K–12 students.
The assistance can extend beyond private-school tuition. Depending on final federal regulations and individual circumstances, scholarships may help families pay for expenses such as tutoring, books, educational technology, special-education services, and other qualified educational costs.
The potential reach is enormous.
A recent American Federation for Children analysis estimates that about 51.7 million children nationwide—nearly 92% of students eligible to enroll in K–12 schools—meet the federal income and enrollment requirements for scholarship programs.
Another analysis estimates that 121.5 million taxpayers could be eligible to claim the credit. If only 5% participated, the report estimates that approximately $9.4 billion could be generated nationwide for K–12 education.
Importantly, these scholarships would be funded through voluntary private contributions, incentivized by a federal tax credit—not by an appropriation from New York’s existing public-school budget.
The Teachers Unions Are Pushing Back
Governor Hochul’s reported intention to participate was immediately controversial among New York’s powerful teachers’ unions.
New York State United Teachers (NYSUT) has publicly opposed participation. NYSUT and the United Federation of Teachers have also been affiliated with New Yorkers for Public Schools, a coalition campaigning against New York’s participation in the federal program.
Their argument is familiar and tired: public policy should focus resources on the traditional public-school system rather than on encouraging alternatives.
Supporters of the federal program view the issue differently. They argue that families—not educational institutions—should be empowered to decide which educational services best meet their children’s needs.
That disagreement is now unfolding in New York.
Hochul Said New York Would Participate. What Happens Next?
In May, Governor Hochul stated that New York intended to participate in the federal program.
But participation requires action on the part of the state.
The IRS has established a process that allows governors to make an advance election for 2027. As of the IRS’s July 24 update, 30 states had done so.
New York was not included on that list.
The Governor’s earlier announcement was an important indication of her administration’s intentions. But until New York completes the federal participation process, New York families lack the certainty that comes with a formal election.
Treasury and the IRS are also continuing work on regulations governing the program, including key questions about eligible students and educational expenses. Those decisions could particularly affect homeschoolers, microschools, hybrid educational models, and families using educational providers outside traditional schools.
The Education Freedom Tax Credit is scheduled to take effect on January 1.
For New York families, the question is whether the state will take the steps necessary to participate—and how the final federal rules will shape the opportunities available to students.
If Governor Kathy Hochul fails to include the Empire State in the federal scholarship program, the dollars will still be donated, but they will not benefit New York students. Instead, they will benefit students in other states.
Image Credit: Lightstock.com/357051 (Tara Becker)