Sherrill's office says it is studying which students the credit would reach. The Oct. 1 federal rules say a state that takes part cannot limit the schools or expenses the scholarships cover.
New Jersey residents can claim a new federal tax credit for gifts to scholarship groups starting in January, but whether the scholarships reach New Jersey children turns on a decision Democratic Gov. Mikie Sherrill has until Jan. 1 to make.
In May, her office said she would wait on Washington. "Governor Sherrill will evaluate the program once the Trump Administration has finalized and published its rules," deputy press secretary Maggie Garbarino said at the time.
The U.S. Treasury Department and the Internal Revenue Service issued those rules Oct. 1.
"As we carefully review this federal guidance, we are examining who the program would serve, which opportunities are available, and how it could best benefit public school students," a spokesperson for the governor said that day. The governor's office did not respond to a request for comment.
The rules address the first of those questions. A state that opts in cannot require scholarship groups to limit the kinds of schools their students attend or the expenses the scholarships cover, under temporary rules already in effect.
It must also list every group in the state that asks to be included and meets the federal definition, the rules say.
If New Jersey stays out, its residents can still claim the credit by giving to groups in states that opted in, according to a Treasury fact sheet. Those scholarships must go to children who live in those states.
New York faced the same choice. Gov. Kathy Hochul, a Democrat, said Oct. 9 that her state's participation had hinged on one condition: "if, and only if, all schools and students, including those in our public schools, could benefit."
She announced that day that New York will participate, saying the 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."
The IRS list of participating states, dated Sept. 14, names 30 states.
Opting in makes the state answerable for every group it lists
Donors can claim up to $1,700 a year, or up to $3,400 for a married couple filing jointly when each spouse gives, Treasury says.
A child qualifies if household income in the prior year was at or below 300 percent of the area's median and the child could attend public school, under the 2025 federal tax and spending law that created the credit.
The money can pay tuition at public, private, religious or charter schools, tutoring for public school students, special education services, books, supplies and qualifying extended-day programs, according to Treasury.
Under the proposed rules, approximately 96 percent of children in states that take part would qualify for a scholarship, by Treasury and IRS estimates.
To take part in 2027, a state must file an election with the IRS by Jan. 1. It completes the election by sending its list of scholarship groups by Feb. 15, Treasury says.
Federal law gives that election to the governor unless state law names someone else.
The administration has not said who would handle New Jersey's filing or which department would review the groups.
The list carries obligations. For each group, the state must certify that the group meets the federal requirements, that the state reviewed its annual audit and that the state investigated any failures, according to the temporary rules.
Each election covers one calendar year.
Treasury and the IRS say they read the law to allow no revocation once a state completes its election, though a state that files by Jan. 1 can back out by never sending its list.
States lose no funding if they decline, the rules say, and their costs of taking part "will not be substantial."
Republicans cite a $911 million estimate and bills that have not had a hearing
Assembly Republicans Michael Inganamort, Dawn Fantasia and Gerry Scharfenberger urged Sherrill on Oct. 5 to opt in. Without it, their release said, "K-12 students could lose out on $911 million in scholarship funds."
Fantasia (R, 24th District) made a local argument. "New Jersey is leaving non-taxpayer funds on the table at a time when students and property taxpayers are feeling the crunch of state aid cuts to many districts throughout the state, including in the Highlands region," she said.
The Assembly Republican office said the $911 million comes from estimates by the New Jersey Policy Institute, a nonprofit that has urged Sherrill to opt in.
The institute's Oct. 1 release describes the figure as its estimate for 2027 through 2029.
The estimate starts from IRS counts of New Jersey tax returns reporting income of $75,000 or more, which the institute puts at nearly 1.8 million.
It assumes giving from 8 percent of them in the first year, rising to 12 percent in the third. It counts a single $1,700 credit for each return, which the institute calls conservative.
The group "didn't try to model cross-state giving," said Wells Winegar, the institute's executive director. Its estimate, he said, "looks at a world where New Jersey opts in and shows the potential dollars that could be unlocked for New Jersey students."
Other estimates differ. Matthew Hale of Seton Hall University wrote in a March opinion piece that the state "could see $70 million to $80 million a year in scholarship funding flowing to New Jersey families," basing it on New Jersey's share of the U.S. population.
Inganamort, also of the 24th District, sponsors a bill that would require New Jersey to take part and have the state commissioner of education send the U.S. Treasury a list of qualifying scholarship groups each year, according to the bill's text.
"Reviewing and certifying the list of qualifying organizations can and should be done in the Department of Education's normal course of business," he said. "I do not believe an appropriation is necessary."
The Assembly Education Committee received the bill March 19.
It has had no hearing or vote since, according to the Legislature's records, checked Oct. 18, and neither has an identical Senate bill that Senate Republican Leader Anthony M. Bucco (25th District) introduced May 11.
"We will be asking the Chair to post the bill," Inganamort said. "Of course, it would be moot if Governor Sherrill simply opted in."
Assemblywoman Verlina Reynolds-Jackson (D, 15th) chairs the Assembly Education Committee.
Sen. Vin Gopal (D, 11th), who chairs the Senate Education Committee, sponsored a 2024 bill creating state tax credits for donations to groups that give private school scholarships to some students.
"Everyone was opposed to it. It was meant to drive a discussion and a conversation and that wasn't happening," Gopal said at the time, after he withdrew the Senate version that June.
His bill would have created a state tax credit, while the 2025 law created a federal one.
Catholic bishops and the teachers union want opposite answers
James J. King, executive director of the New Jersey Catholic Conference, the bishops' public policy voice, wrote to Sherrill in early June on behalf of Cardinal Joseph W. Tobin and the state's Catholic bishops. The letter pressed Sherrill and her administration to opt the state in, Bishop Kevin J. Sweeney of Paterson wrote in a July column.
The Tri-County Scholarship Fund, which awards scholarships in the Diocese of Paterson, says it is "prepared to help implement" the credit if the governor opts in. It says it is awarding scholarships to up to 1,025 students this school year.
Teach NJ, part of a coalition that seeks public funding for yeshivas and other Jewish day schools, has spent the past year in regular talks with Sherrill's team about the credit, Katie Katz, its executive director, said in remarks published Oct. 13.
The New Jersey Education Association took the other side as soon as the law passed. "We must ensure that New Jersey does not opt into this latest attempt to undermine our great public schools," Steve Beatty, then the union's vice president and now its president, said in July 2025.
The New Jersey School Boards Association's policy manual says the group "opposes the use of public funds for vouchers or tuition tax credits for attendance at private or religious schools."
Democratic governors elsewhere have split on the credit
Colorado, led by Democratic Gov. Jared Polis, is on the IRS list. When the rules came out, Polis said he was glad they "clarify that these donations can support public school students."
Republican legislative majorities in North Carolina, Kansas and Kentucky overrode vetoes by Democratic governors to bring their states in.
Democratic governors in Wisconsin, Arizona, Minnesota and Oregon have vetoed opt-in bills or said no.
"Public funds should go to public schools. Period," Wisconsin Gov. Tony Evers wrote in a March veto message.
The proposed rules are open to comments through Dec. 1, with a public hearing set for Dec. 15.
New Jersey's election, if Sherrill makes one, is due by Jan. 1. Its list of scholarship groups would follow by Feb. 15.
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