New York Gov. Kathy Hochul announced late Friday that the state would opt in to the Federal Scholarship Tax Credit (FSTC) program, providing financial relief and easier access to tuition scholarships for Catholic school students.
Without Hochul’s action, parents in the Archdiocese of New York would have been shut out of a new source of scholarship aid, funded by a federal tax credit that fully offsets gifts to scholarship-granting organizations (SGOs) that help pay for tuition and other education costs.
“Every parent wants their child to have a great education and the best possible chance to succeed,” Hochul, who is Catholic, said in a statement on the governor’s office website.
“After a careful review of the federal regulations, we believe this program has the potential to bring millions of additional dollars to New York students and families without taking a single dollar from public schools or our state or local budgets,” she said.
“I’m not going to leave money on the table when it could help our kids,” the governor wrote.
Hochul had first indicated her intention for New York to participate in the tax credit in May, but did not take formal action until Friday.
‘We are sincerely grateful’
New York State’s bishops applauded the governor’s decision.
“By opting in to the new Federal Scholarship Tax Credit, Gov. Kathy Hochul is helping to empower New York families to provide the best education for their children, regardless of income or where they choose to send their children to school, at no additional cost to the state,” the New York State Catholic Conference (NYSCC), which represents the state’s bishops, said in a statement.
“We are sincerely grateful, and we applaud her decision to put New York’s kids first.
“The new program provides a dollar-for-dollar federal tax credit up to $1,700 for individual tax filers and $3,400 for joint filers for gifts to qualified SGOs that support children’s educational activities. These SGOs help families of children in public, religious, independent, and charter schools with expenses such as tuition, after-school enrichment programs, tutoring, special needs services, transportation, uniforms, books and supplies, and equipment.
“With many New Yorkers struggling to afford basic necessities, these scholarships are a critical lifeline. But because the federal legislation requires state governors to opt in to the program, New York’s participation was no sure thing. Governor Hochul understands that this program does not take a single dollar from public school education funding and it will help thousands of families. Rather than sending this money out of state, she has chosen to keep it in New York to help New York’s kids. While such a decision is common sense from a policy perspective, it nevertheless required political courage and will.
“A rising tide lifts all boats, and our expectation is that the new tax credit will spur significant giving to new and pre-existing SGOs that provide scholarships to students in our state’s Catholic schools, as well as to SGOs that provide critical support to students in public schools. We thank the Governor for her support, and we encourage New Yorkers to learn more about this important effort,” the NYSCC said.
‘A meaningful step’
In a statement, Sr. Mary Grace Walsh, ASCJ, Ph.D., superintendent of Schools for the Archdiocese of New York, expressed her gratitude for the move.
“We are deeply grateful to Governor Kathy Hochul for officially opting New York into the Federal Scholarship Tax Credit Program. This is a meaningful step toward expanding educational opportunities for children and families throughout our state, regardless of the type of school they attend. Beginning in 2027, the program will provide a dollar-for-dollar federal tax credit for contributions to qualifying Scholarship Granting Organizations, helping to make funding available to students attending public, religious, independent, and charter schools.
“These scholarships can support a wide range of educational needs, from tuition and tutoring to after-school enrichment, transportation, special education services, uniforms, books, supplies, and equipment. For families, this means greater potential access to resources that support their children’s learning, growth, and success. We are especially grateful for the opportunities this program may create for Catholic school families, while recognizing its broader potential to benefit families across every school community in New York. We thank Gov. Hochul for taking this important step in support of all of New York’s children and their educational futures.”
A ‘transformative opportunity’
Earlier this month, Bishop of Trenton David O’Connell, chairman of the U.S. Conference of Catholic Bishops’ Committee on Catholic Education, called the tax credit a “transformative opportunity.” “The FSTC will create opportunities for families to access much-needed resources to expand their options for choosing the best tools and learning environment for their children,” he said.
The federal scholarship tax credit became law in July 2025 as part of the One Big Beautiful Bill Act. The law leaves participation up to each state, so every governor, along with the District of Columbia, has to choose whether to join. Starting Jan. 1, 2027, taxpayers can claim the credit in states that have joined. The Internal Revenue Service counted 27 participating states as of June.
Now that New York State has opted in, the first stage of the process, the governor must submit a list of qualified SGOs to the U.S. Treasury. Then, an individual taxpayer makes a cash contribution of up to $1,700 (or $3,400 for married couples filing jointly) to a qualified SGO on the state’s list. The SGO then uses those donations to provide scholarships to eligible K-12 students for qualified education expenses. Finally, when filing a federal return, the taxpayer receives a dollar-for-dollar credit of up to $1,700 (or $3,400) against their federal tax liability.