NYS could opt into Federal Tax Credit Scholarship Program. Here's what to know.

Long Islanders could get help covering educational expenses like tuition and tutoring if the state joins a new federal initiative that is embraced by school-choice advocates but criticized by public education stakeholders.

Gov. Kathy Hochul has said she supports the Federal Tax Credit Scholarship Program, created under President Donald Trump and signed into law in July. She plans to opt into the initiative after reviewing the regulations for any “poison pills."

As of April, more than two dozen states have joined the program. New York would be one of the few Democratic-led states, along with Virginia and Colorado, to participate in the initiative, according to the Internal Revenue Service.

There are indications, however, that other blue states are getting on board. State legislatures in Kansas and Kentucky recently overrode vetoes from their Democratic governors to participate in the program, according to media reports.

Proponents include religious organizations and other entities that support school choice. They believe the program would, in part, open up funding for students from low-income families. 

But there are some who remain skeptical, including representatives for the state Education Department and public school leaders. They fear the program could steer funding away from public schools and create inequities. 

At a press event in New York City on Monday, Hochul argued in favor of the program, which she said could be tailored to benefit public-school students.

“If there's a way for people who care about public education to broaden this and get people to contribute and help get a critical mass of money to help schools that otherwise are struggling... Why wouldn't we do that?” she told reporters.

Here's what Long Islanders need to know:

How does the program work?

Taxpayers can receive up to a $1,700 dollar-for-dollar tax credit if they contribute to a Scholarship Granting Organization, or SGO, defined as a charity that uses at least 90% of its income on education scholarships. The organizations will then use the money, which could be more than the contribution, for scholarships or vouchers for children. 

States must opt in to the program and designate which organizations are eligible to participate. The federal Education Department, citing a study by political action committee Democrats for Education Reform, said the tax credit could shift an additional $24 billion to SGOs.

Who would qualify?

Public, private and charter school students in elementary or secondary schools would be eligible for the scholarships or tuition vouchers. Students' household income could not exceed “300% of the area’s median gross income,” according to U.S. Department of Education. 

The median household income in Nassau was $143,144 while Suffolk's was $126,863 in 2024, according to the Census Bureau.

Taxpayers who donate to SGOs can apply for the credit in 2027.

What could the money pay for?

Scholarships can be awarded for private school tuition, tutoring or after-school and enrichment programs. It can also cover costs for uniforms, transportation, computer technology or classroom supplies. Scholarships can also be used to support students with special needs.

Public schools cannot charge for offerings or materials that are part of regular instruction, according to Robert Lowry, a deputy director at the New York State Council of School Superintendents. So while public schools could set up foundations to receive donations, the money could only be used for a limited number of programs, such as before- and after-school care and field trips, he said.

Who supports the initiative?

Supporters include religious organizations like the New York State Catholic Conference, which advocates for Catholic schools. Its executive director, Dennis Poust, praised the decision.

“Governor Kathy Hochul’s announcement that she intends to opt in to the new Federal Scholarship Tax Credit is welcome news for hundreds of thousands of New York children and their parents, who struggle daily to afford their educational expenses,” Poust said in a statement. “This new credit will address the affordability gap by driving potentially billions of dollars of investments in education in New York that otherwise would have gone to Washington.”

A spokesperson for the UJA-Federation of New York, which offers scholarships for Jewish education, said in an email that they were thankful the governor is opting in.

“This new funding source will meaningfully expand eligibility for tuition assistance and ease financial pressure on both families and schools," the spokesperson said.

Bishop Barrington Goldson, founder of The Academy Charter School with several campuses on Long Island, said in a statement, "The Academy Charter School welcomes any additional funding for education, particularly funding that supports economically disadvantaged families and students."

Charter schools are considered public schools and do not charge tuition. 

What are the arguments against the program?

Critics are concerned the program could divert money from public schools, deepen inequities and cause some students to choose private over public schools.

“The New York State Education Department has been monitoring this proposal and has significant concerns, including questions around oversight, impact on public schools, and the lack of clear standards and accountability," said JP O’Hare, a spokesperson for the agency.

Lowry, of the superintendents council, said his organization opposes the program. He believes the credit will mostly benefit families who already send their children to private schools. 

"The law does not attempt to target the benefit or incentivize scholarships directed to low-income families," Lowry said.

He also raised concerns about accountability, and said the program could result in financial losses for public schools. The reduction in tax revenue could impact the federal government's ability to support public schools, while tuition vouchers could shift families away from public education, Lowry said.

Enrollment at Island public schools has fallen 7.7%, from more than 455,000 students in 2012-13 to about 420,000 last school year, Newsday previously reported.  

By Lorena Mongelli

lorena.mongelli@newsday.com

Lorena Mongelli has been reporting for Newsday since 2021. Prior to that, she covered breaking news at the New York Post.