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Tuition Tax Credits and Deductions
Educational tax credits are a direct reduction in taxes that fully or partially refund expenditures made by parents or others for educational expenses such as tutoring, books, computers, and in some states, private school tuition. State legislation determines the amount of credit and which educational expenses qualify. In some states, families with no tax liability can receive a refund for some or all of the amount spent.
Educational tax deductions allow for a certain amount of educational expenses to be deducted from taxable income prior to the calculation of tax liability. A family with no tax liability will receive no benefits from this type of program.
Limited school tax credits or deductions (that include both private school tuition and public school expenses) exist in Minnesota, Illinois and Iowa. Arizona offers a $500 tax credit for donations to a school tuition organization and for contributing to public schools for extracurricular activities. In 2001, Florida's legislature passed a law providing for state tax credits for corporate contributions to nonprofit scholarship funding organizations, to take effect January 1, 2002. Scholarships resulting through the Florida tax credit program are limited to $3,500.
Many states already have a tuition tax credit on the books, but it applies only to tuition paid to public and private colleges, not K-12 schools. Currently, tuition tax credit programs sponsored by the federal government are the Lifetime Learning Credit and the Hope Scholarship Credit, but both only apply to post-secondary education.
Individuals supporting tax credit and tax deduction proposals should be careful to make sure such legislation benefits low-income families equally, either through donations to private scholarship programs that cover private school tuition, tutoring and other supplementary services, or supplementary education programs and teacher training costs in public schools.
To learn more about the tax credits and deductions available in your state, contact your state Department of Revenue or Taxation.
Web Links to information and resources on Tax Credits
Institute for Justice: This Washington D.C.-based public interest law firm is involved in a majority of decided and pending school choice cases, particularly those dealing with school vouchers and educational tax credits in states throughout the U.S.
CATO Institute: This nonpartisan public policy research foundation seeks to broaden the parameters of public policy debate to allow consideration of more options that are consistent with the traditional American principles of limited government and individual liberty. The Institute promotes parental power in education and is a supporter of educational tax credits.
Mackinac Center for Public Policy: This organization is a policy research center that promotes the principle of allowing parents to choose the best and safest schools for their children and ensuring economic freedom and prosperity. It is a strong advocate of educational tax credits, among other education reforms.
Black Alliance for Educational Options (BAEO)
1710 Rhode Island Avenue NW, Floor 12, Washington, D.C. 20036
Phone: 202-429-2236 Fax: 202-429-2237