New York May Join Federal Scholarship Tax Credit Program

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What Independent Schools Need to Know

It is looking increasingly likely that New York will opt into the federal Educational Choice for Children Act (the Act) after Governor Kathy Hochul expressed support for the program, pending review of final IRS regulations expected later this year. If approved, the program could expand scholarship funding opportunities for independent schools and increase access to private education for eligible families beginning in 2027. Here’s what independent school leaders need to know.

New York Signals Support for the Act

Governor Kathy Hochul recently expressed serious interest in opting into the Act, reportedly indicating she intends to approve New York to enter the program as of January 1, 2027. While the governor’s office has stated it is awaiting information from the federal government on the program and will thoroughly review the details of the policy, Hochul maintained her position that opting into the Act would be beneficial for schools in New York. Still, her final support of the Act is pending review of the IRS regulations which are not expected until later this year.

A Refresher on the Act

The Act was part of the recently passed One Big Beautiful Bill Act (OBBBA) which introduced a federal tax credit for donations to Scholarship Granting Organizations (SGOs), set to begin January 1, 2027. It allows taxpayers to claim a non-refundable federal tax credit per year of up to $1,700 for individuals and $3,400 for married couples for cash donations to qualified SGOs.

States must certify SGOs and alert the U.S. Treasury of their certification before the beginning of 2027. An SGO is a 501(c)(3) organization which will collect donations from individuals or corporations with the aim of awarding scholarships to K-12 education. They are required to distribute at least 90% of the contributions received as scholarships annually while serving a minimum of 10 students per year, not all attending the same school. Awarded scholarships must go to students from families earning no more than 300% of the area median income. In addition, SGOs must operate independently from schools but will often work closely with them.

To learn more about the Act and how the federal SGO tax credit program could impact your independent school, read our recent article, “New Federal Tax Credit for Scholarship Granting Organizations: Will It Impact Your School?”

What New York Independent Schools Should Do Now

With the possibility of New York opting into the Act, schools may want to assess their options. Is there an SGO that is already operating which the school could partner with? Or are there schools in the area that want to band together and create an independent SGO that would provide financial aid support to their students? These are questions that we can discuss with schools that are navigating this new landscape.

Keep Up to Date on Your State’s Status

With many states still deciding how to proceed, independent schools should continue to watch who opts into the program. The Act allows families greater access to private education, as it could increase the amount of financial aid available to potential students.  

We will continue to monitor the situation and advise you of any other changes to states’ positions.

Contact Us

If you have any questions, please contact your PKF O’Connor Davies client service team or:

Robert Cordero, CPA
Partner
Independent School Practice Leader
rcordero@pkfod.com | 914.341.7031

Michael Trapp, CPA
Partner
Independent School Practice
mtrapp@pkfod.com | 914.341.7640