Your son is going to be excited about Santa, if only for a few years. And the way I see it, there’s nothing you can really do about this except to work to get comfortable with the idea.
You do not want your three-year-old to feel miserable and guilty trying to keep a secret from his cousins. You do not want him shocking them with the truth and making the whole family angry with you. And you don’t want your son to sit to one side and watch his cousins empty their stockings. The way I see it, that would be cruel.
You do not have to contribute to the hype about Santa by reading Christmas books or visiting a mall Santa. In my experience, most kids don’t pay much attention to the name written on the boxed gifts as they tear through them, until parents prod them to slow down and remember whom to thank. So I recommend recruiting your husband to try to negotiate with your in-laws to shift to having Santa bring only the stockings, which retains the magic while minimizing Santa’s role a bit.
Kids get excited about Santa, and the Tooth Fairy, and building houses for elves out of bark and moss, and eventually reading the Harry Potter books, because magic is, well, magical. Most parents find these (short-lived) beliefs charming and harmless.
I think it would be helpful to try to unpack what it is about Santa that is making you so uncomfortable. Is it fear that he will always want Christmas? Or fear that he will talk about Santa to his Jewish friends? Does it stem from a feeling that he should go through a childhood that looks more like yours?
Your son is an interfaith grandchild, part of an extended interfaith family, and that makes Santa part of his cultural legacy. Even if you give him a clear Jewish label and strong Jewish education, he is going to have to grow up and make his own decisions about his identity, his beliefs, his observances. You are lucky to have an in-house expert on all this, your husband. He apparently grew up celebrating Christmas, and here he is, raising Jewish children with you.
Susan Katz Miller is both an adult interfaith child, and an interfaith parent. She is a former Newsweek reporter, and the author of “Being Both: Embracing Two Religions in One Interfaith Family” (Beacon Press).