As CNBC Select reports, according to the National Retail Federation, American families will spend $36.9 billion on back-to-school expenses for K-12 students this year. That amount rises to $73.9 billion concerning college student spending in 2022.
When it comes to paying for back-to-school supplies, many families take advantage of any discount they can find, like the relevant sales tax holidays available in ~16 states. For offsetting the increasingly higher costs of tuition and educational expenses, some turn to federal education tax credit programs like the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC).
But some states provide additional tax credits (which lower the total taxes owed) or deductions (which reduce an individual’s total taxable income) to help residents with the financial burden of paying for tuition, books, transportation, computers, tutors and supplies.
Here are the nine states that provide back-to-school tax credit relief for families, per EdChoice.
Parents who transfer their children from failing public schools (as determined by the state government) to non-failing public or accredited private schools are eligible for a refundable tax credit worth the lesser of “(1) 80 percent of the average annual state cost of attendance for a K-12 public school student during the applicable tax year, or (2) their children’s actual cost of attending school,” per EdChoice. Parents with children starting school, but zoned to attend a failing school, are also eligible. The average tax credit is $2,940 and is fully refundable.
Illinois’ Tax Credits for Educational Expenses program is accessible to most K-12 students but is non-refundable and cannot reduce an individual’s tax liability to less than zero. It is also a little more complicated. A maximum of 25% of annual educational expenses after the first $250 are covered under the program, and the maximum that can be claimed is $750 (if you spend $3,250). Eligibility is determined by an income limit of $500,000 for married taxpayers who file jointly, or $250,000 for single tax filers.
A $1,000 tax deduction is available to parents of homeschooled children, or those attending private school. Eligibility doesn’t take income into account, and a deduction can be obtained for each eligible K-12 child.
Covering 25% of their annual education expenditures, a maximum tax credit of $500 is available to parents that spend $2,000 on tuition, textbooks and extracurricular activities. The Iowa tax credit is non-refundable.
The Louisiana Elementary and Secondary School Tuition Deduction is available to any taxpayer that has expenses related to the education of any K-12 private school student. There is no income limit and the maximum that can be deducted is $5,000 per child, at a 100% rate of eligible expenses claimed.
In 2020, the average tax deduction for educational expenses in Minnesota was $1,178, per EdChoice. However, the maximum deduction for a family is $1,625 per child — and any parent or guardian who spends money on approved educational expenses for a child is qualified to receive a deduction. According to Fatherly, while you must reside and pay taxes in the state to qualify, you may receive the tax deduction even if your child attends school in the neighboring states of North Dakota, South Dakota, Iowa or Wisconsin. Further, Minnesota also offers a refundable 75% tax credit of up to $1,000 for educational expenses outside of tuition, largely targeting supplies, to low-income ($37,500 cap) families.
Ohio’s K-12 Home Education Tax Credit provides any family with a homeschooled child a $250 refundable credit for qualifying expenses, including supplies, books, software, subscriptions and supplementary material. Any child who is legally excused via Ohio’s compulsory attendance law are eligible. Families earning less than $100,000 are also eligible for a $1,000 tax credit toward attendance of an in-state non-private charter school.
In South Carolina, parents with a child designated by the South Carolina Department of Education as meeting the federal definition of a “child with a disability” may be eligible to receive up to $11,000 in refundable tax credits.
Wisconsin provides up to $4,000 per child in grades K-8 (and up to $10,000 per child in grades 9-12) in tax deductions to parents of children attending eligible private schools. Tuition must be paid out of pocket for said deduction to apply. There is no income limit, but the attended private school has to be approved — meaning they “must provide at least 875 hours of instruction per year in a sequentially progressive curriculum including reading, language arts, math, social studies, science and health,” according to EdChoice.
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