Federal tax credit could be a boon for Catholic students

Taxpayers, under the Federal Scholarship Tax Credit, could donate up to $1,700 to organizations

Eighth graders work on an exercise during Spanish class on Sept. 13, 2023 at Saratoga Central Catholic School in Saratoga Springs. Cindy Schultz for The Evangelist (Courtesy photo of CINDY SCHULTZ)

In Donald Trump’s “One Big Beautiful Bill,” there is a provision that could be a game-changer for Catholic school students in the Diocese of Albany.

This administration’s signature legislation creates a new federal tax credit — called the Federal Scholarship Tax Credit — for individuals who make donations to 501(c)(3) public charities providing scholarships to elementary or secondary school pupils, an obvious potential benefit to Catholic schools seeking students.

 “The Federal Scholarship Tax Credit passed in the OBBB bill allows any taxpayer to claim a credit of up to $1,700 for gifts made to qualifying Scholarship Granting Organizations (SGO),” said Dennis Poust, executive director for the New York State Catholic Conference (NYSCC)  in an email with The Evangelist. “For example, if you owe $10,000 to the IRS, you could take up to $1,700 of that liability off by donating that amount to an SGO, so now you’d only owe the government $8,300. You’re basically redirecting your tax dollars to help families with their kids’ educational needs.”

The SGOs would then distribute the funds to eligible kindergarten-Grade 12 families — a family’s household income must not exceed 300 percent of the median gross income for where they live — for education expenses.

“The (FSTC) covers a broad range of educational expenses for elementary and secondary students in public, private or religious schools including extended day programs, tuition, fees, tutoring, special education services, instructional technology, materials and supplies, and transportation,” added Jim Cultrara, Director for Education for the NYSCC. “While the FSTC can help support the education of kids in both public and private schools, it does not include expenses related to home school.”

Now for the part that muddies the waters: states must opt-in to participate. Will New York? It is likely too early to tell — the credit is slated to go into effect January of 2027 — but the Catholic Conference will be on the front lines advocating for it.

“It’s a huge win for school choice advocates. But here’s the rub: Governors need to opt in to the program for it to help kids in individual states. So our efforts in the coming year will be on getting Governor Hochul to opt in to the program,” Poust said. “It should be a no-brainer — it costs the state no money (these are federal tax dollars) and New Yorkers would still be able to claim the credit by donating to out-of-state programs that help families in other states. 

“So why would the governor turn down the chance to help her own constituents? Our hope and expectation is that she will see the logic of this clearly and opt in. But we also know the powerful state public school teachers unions hate this program because they don’t like anything that might help parents select a religious or independent school and disturb their monopoly. So they will be pushing her to opt out.”

Cultrara said that Hochul supported similar legislation when she was lieutenant governor, adding, “As a mom herself, Governor Hochul is acutely aware of the struggles families endure to provide the best education for their children. …   When it comes down to making a decision on whether to opt-in, thousands upon thousands of families and community leaders will expect Governor Hochul to listen to her heart, not the teacher union lobbyists.”

‘Gravissimum Educationis’

When it comes to school choice and access to Catholic education, Shawn Peterson, president of Catholic Education Partners, finds the current educational environment “an especially interesting time, because in 2025, we’re coming up on the 60th anniversary of ‘Gravissimum Educationis’ — and that’s the document that we who work in the church point to as the reason why we support parental choice initiatives. That’s the document that says parents are first educators — and the state needs to do things to support parents in that choice, including financial support.”

“Gravissimum Educationis” (Declaration on Christian Education) — teaching from the Second Vatican Council issued under St. Paul VI in 1965 — notes, “Since parents have given children their life, they are bound by the most serious obligation to educate their offspring and therefore must be recognized as the primary and principal educators.”

Margaret Kaplow, communications manager for the National Catholic Educational Association, added over half of the states offer some form of school-choice credit.

“Thirty-two states and the District of Columbia provide children the option to attend the public or private school of their parents’ choice through tax credit, voucher or scholarship,” she said. “In 2024, school choice programs expanded in 15 states — 18 percent of Catholic school students utilized a parental choice program, and 31 percent of schools enrolled students utilizing a parental choice program.”

As might be expected, some states perform better than others.

“The arch/dioceses in Ohio, Florida, Indiana, Oklahoma, Iowa and Arizona reported that over 50 percent of their students utilize parental choice programs,” noted Kaplow. “In Florida, 85.7 percent of students are utilizing parental choice programs, compared to 60.1 percent last year. In Ohio, 80.9 percent of students are utilizing parental choice programs, compared to 62.9 percent last year.”

Peterson is optimistic that — with potentially expanded tax funding — those numbers can increase.

“We hope it will energize a lot of states. Not only increase programs or increase access for kids in states that already have school choice, but we’re hoping a lot of the blue states will opt in as well,” he said. “Especially because it won’t cost their state anything; it won’t take any money away from public education.”

“If I were a blue state governor,” Peterson said, “I wouldn’t want a bunch of federal tax dollars leaving my state to help other states; I’d want to keep that in my state to help the children in my state. So we want blue state governors to really take a serious look at that — and decide to opt into the program.”