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9 States Offer Individual Tax Credits, Deductions

For better or for worse, back-to-school season is here! Along with waking up early, packing lunches, and hunting for missing homework, parents have something else to look forward to — spending money. Whether it’s that long school supply list, trendy back-to-school clothes, or expensive extracurriculars, back-to-school doesn’t come cheap.

Although it isn’t common, a few states try to help parents offset some of the costs associated with the school year in the form of individual tax credits or deductions. In a time of record (though perhaps slowing) inflation, these tax credits could be helpful for many families.

In most cases, what you can claim is very specific — you can’t just submit your Wal-Mart receipt from the horde of notebooks, Ticonderoga pencils, and Pink Pearl erasers at tax time. Some of the tax credits help parents pay for instruments, textbooks, school supplies, and more. But in many states, the tax credits function a lot like school-choice vouchers, which look like tax credits for students but are actually financial incentives for parents who aren’t a part of the public school system.

Here are 9 states that offer tax benefits for school-related expenses and what you need to know about them.

School Supplies-Type Individual Tax Credits

Illinois

In Illinois, parents can receive a tax credit of up to 25% of their annual expenditures after $250 on tuition, textbooks, lab fees, or extracurricular activities. The credit, which tops out at $750, can be claimed by families with students in both public and private schools, as well as homeschooling families. There is an income cap of $500,000 for married taxpayers who file jointly or $250,000 for single tax filers.

Iowa

The state of Iowa provides parents with a tax credit equal to 25% of their annual expenditures on textbooks, tuition, lab fees, and school-related activities. To receive the maximum credit of $500 per child, parents must spend at least $2,000 and, because the credit is nonrefundable, have a state tax burden of at least $500.

Minnesota

Low-income Minnesota families can claim a refundable tax credit of 75% of the amount spent on education, not including tuition. The credit begins to phase out at an income level of $35,000 and caps at $37,500.

Charter School/School Choice/Private Tuition-Individual Type Tax Credits

Alabama

The Alabama Accountability Act is essentially a school choice individual tax credit that offers low-income families who transfer from “failing” public schools to non-failing public or private schools a tax credit to offset the annual expense of attending a school out of their zoned district. To qualify, parents must prove that their children are zoned for or enrolled in a public school that is considered to be “failing” by state-determined standards. The average tax credit is $2,940 and is fully refundable, meaning that you can still claim this credit even if you don’t owe any taxes.

Indiana

Parents in Indiana are eligible for a $1,000 tax deduction for children who are enrolled in a private school or homeschooled. There is no income limit, and parents can claim the deduction for each child from Kindergarten to 12th grade.

Louisiana

The Louisiana Elementary and Secondary School Tuition Deduction provides a maximum deduction of $5,000 per dependent child for private school tuition or related expenses such as books or uniforms. There is no income limit, and any student in the state can qualify if they attend private school during the tax year.

Minnesota

Minnesota families can claim 100% of their educational expenses up to $1,625 per child, including money spent on books, educational activities, tutors, and private school tuition. The deduction is open to Minnesota residents even if children attend school in the neighboring states of North Dakota, South Dakota, Iowa, or Wisconsin.

Ohio

Homeschooling families in Ohio can claim a tax credit of up to $250 for expenses, including curriculum materials, software, subscriptions, and other home education necessities. There is no income limit, and because the credit is non-refundable, families must carry a state tax burden to qualify.

Families who earn less than $100,000 per year are also eligible for a credit of up to $1,000 for tuition at non-chartered private schools within the state.

South Carolina

The South Carolina Refundable Educational Credit for Exceptional Needs Children provides an $11,000 refundable tax credit for families of children with “special needs.” To qualify, the child must have a diagnosis from a licensed medical practitioner, and parents must prove that their zoned school cannot meet the student’s needs.

Wisconsin

Private school families in Wisconsin are eligible for up to $4,000 per student in grades K-8 and up to $10,000 per child in grades 9-12. There are no income caps or eligibility requirements, but tuition must be paid out-of-pocket and not by voucher or college savings account.

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