By Wells Winegar, Executive Director, New Jersey Policy Institute
As Governor Mikie Sherrill begins her term in office, one of the earliest education decisions before her is also one of the most straightforward: whether to allow New Jersey’s K–12 student population to benefit from the new federal Education Freedom Tax Credit, a program designed to unlock billions of dollars in private, charitable donations for scholarships for use in K–12 education. And, in light of the Governor’s stated goal of clawing back the disproportionate amount of money New Jersey sends to the federal government, this is a perfect way to help accomplish that mission.
This is not a symbolic gesture. It is a practical decision for every governor to decide to “opt in” to this federal program. By participating, there will be very positive consequences for families, taxpayers, and school systems across the state. Failure to opt in will bring enormous, missed opportunities and resulting harmful impacts to kids in the Garden State.
Under this federal tax credit, individuals may receive a 100 percent credit against individual income tax liability for up to $1,700 in donations on an annual basis to nonprofit scholarship organizations that support K–12 students. These scholarships can be used for a broad range of education-related expenses, including tutoring, special education services, after-school programming, and tuition, regardless of whether a child attends a public, charter, private, or religious school.
The law is already in place. Whether New Jersey families benefit now depends on a single decision by the governor: opting the state in.
That decision is beginning to take shape nationally. While most of the country’s Republican governors have already opted in, Colorado Governor Jared Polis recently became the first Democratic governor to do so. His action underscores that the opt-in decision is not a partisan exercise, but a matter of expanding educational resources and opportunities for children and families.
New Jersey faces many of the same pressures that states across the country are confronting. School districts are managing rising costs, lingering learning loss, and increasing demand for individualized student support. Families, meanwhile, are facing affordability challenges that extend well beyond tuition, including tutoring, enrichment, and services for students with special needs. The federal Education Freedom Tax Credit provides a mechanism to help meet those needs without altering existing funding formulas or imposing new mandates on schools. That is, the credit will bring more, not less, money to K–12 education.
For the scholarship organizations already doing this work in New Jersey, opting in would mean the ability to serve more students, expand proven programs, and reduce waiting lists that force too many families to hear “not this year.” These organizations have earned trust through years of results, careful stewardship, and a singular focus on student success.
Importantly, the program is not limited to any single type of student or school. Public school students are eligible, as are students who rely on supplemental services outside the traditional school day. The focus is on supporting students where they are, rather than prescribing a single educational model.
Choosing not to opt in is not a neutral decision. If New Jersey declines, its taxpayers may still participate in the program—and will surely do so—by donating to scholarship organizations in states that do opt in. In that scenario, New Jersey families would effectively help fund educational opportunities elsewhere while receiving no benefit at home.
That outcome would be particularly painful for the families already working with New Jersey-based scholarship organizations—families who know the need exists here, who see the impact firsthand, and who simply want the ability to support students in their own communities.
Opting in does not require dismantling existing systems or redefining public education. It simply allows private dollars, encouraged by federal tax policy, to flow to students and families who need additional support. Participation is voluntary for donors, families, and schools alike. And while there may be some pushback from the teacher’s union, that shouldn’t deter this important decision for New Jersey students and families — just because some funding my go to non-unionized educational resources.
At its core, the decision before the governor is about priorities. Does New Jersey want to expand access to flexible, student-centered resources at a time of rising costs and uneven outcomes, or does it want to leave those resources unused while other states move forward?
For a new administration seeking early, pragmatic actions that align fiscal responsibility with student success, opting into the federal tax credit program is a clear place to start.
