Education Freedom Tax Credit in New York: What Hochul's Opt-In Means for Donors

What is the Education Freedom Tax Credit and how can you qualify in New York?

The Education Freedom Tax Credit is the federal scholarship tax credit in Section 25F of the tax code. You give cash to a scholarship granting organization (SGO), and your federal income tax drops by the same amount, up to $1,700 a year. Gifts count starting January 1, 2027.

Donors qualify if they are U.S. citizens or residents who owe federal income tax and give cash to an SGO on New York's list, or any covered state's list. You designate the gift as a qualified contribution. There's no donor income limit.

Families qualify for the scholarships if household income is at or below 300% of area median gross income and the child is eligible to enroll in a New York public school.

New York's opt-in status

New York is opted in (announced; not yet on the IRS list). On October 9, 2026, Governor Kathy Hochul said New York will participate. That made it the 31st state to say yes, and the largest Democratic-led state so far.

Hochul had set a condition: New York would join "if, and only if, all schools and students, including those in our public schools, could benefit." After reviewing Treasury's proposed rules, published October 2, she concluded the program wouldn't take "a single dollar from public schools or our state or local budgets."

Two steps remain under the proposed rules:

1. By January 1, 2027: New York files its 2027 advance election with the IRS (Form 15714).
2. By February 15, 2027: New York submits its list of SGOs.

If either step slips, New York SGOs can't accept credit-eligible gifts for 2027. The statement didn't name a state agency to run the list.

What it means for New York donors

New York has high state and local income taxes, but no state scholarship tax credit. For donors, that means a clean federal calculation: your gift up to $1,700 becomes a credit, with nothing subtracted first.

Worked example. A Brooklyn couple each give $2,000 to a New York SGO in 2027 and designate $1,700 apiece as qualified contributions. They claim $3,400 in federal credits. The remaining $600 may count as an ordinary charitable deduction if they itemize. See whether donating to an SGO is tax deductible.

What it means for New York families

New York has no voucher, ESA or state tax-credit scholarship. Today's help is private, like the Children's Scholarship Fund's partial tuition awards. Our New York scholarships guide covers current options and deadlines.

Federal-credit scholarships could reach far more families. The 300% limit is tied to your area's median income, so it's higher in places like New York City, Long Island and Westchester. Scholarships can cover tuition, academic tutoring, special needs services, books, supplies and computer technology, as each SGO decides. Hochul said business leaders plan to use the program to help public school students. Treasury's guidance on homeschool costs is still coming.

New York timeline

• October 9, 2026: Hochul announces New York will opt in.
• January 1, 2027: advance election due; credit-eligible giving begins.
• February 15, 2027: New York's SGO list due.
• January 31, 2028: SGO acknowledgements for 2027 gifts.
• Spring 2028: claim on your 2027 return.

How to give and claim

1. Pick an SGO once New York's list is out. Established New York scholarship groups include the Children's Scholarship Fund and Tomorrow's Hope Foundation. Confirm your choice is on the IRS SGO list when you give.
2. Give cash on or after January 1, 2027, and designate it for New York. Spouses each give separately.
3. Keep the acknowledgement with your donor number.
4. File Form 8525. Our guide on how to claim the federal scholarship tax credit covers each step, and our checklist helps you donate to a scholarship fund.

Edulist doesn't take donations. You give directly to the SGO. You can pledge on Edulist and we'll email you when New York's list is published. This page reflects Treasury's proposed rules as of October 13, 2026. It is not tax advice; ask your tax professional.