Are K-12 Education Expenses Tax Deductible? Here’s What to Know
Understand the tax implications of K-12 education expenses, including potential deductions, eligibility requirements, and state-specific considerations.
Education costs add up quickly, and many parents wonder if they can get tax relief for K-12 expenses. While tax deductions and credits exist for higher education, the rules for elementary and secondary school costs are more limited. Understanding what qualifies can help families plan their finances effectively.
Tax benefits for K-12 education vary by federal and state laws. Some expenses qualify under specific programs, while others do not receive any tax advantages.
Federal Deduction Requirements
The IRS does not allow a direct federal tax deduction for most K-12 expenses. Unlike higher education costs, which may qualify for deductions or credits, elementary and secondary school expenses generally do not receive the same treatment. However, certain tax-advantaged accounts can provide indirect benefits.
Coverdell Education Savings Accounts (ESAs) allow earnings to grow tax-free, and withdrawals for qualified education expenses—including K-12 tuition—are not subject to federal income tax. Contributions are not tax-deductible, and the annual contribution limit is $2,000 per beneficiary, with income restrictions.
A 529 plan, originally designed for college savings, was expanded under the Tax Cuts and Jobs Act of 2017 to include up to $10,000 per year in K-12 tuition expenses. While contributions are not federally deductible, investment growth and withdrawals for qualified expenses remain tax-free.
Eligible Education Costs
When determining which K-12 education expenses qualify for tax benefits, it’s important to distinguish between tuition, required materials, and supplementary costs.
Private or religious school tuition can be paid using tax-advantaged accounts. Educational materials such as textbooks, workbooks, and specialized software required for coursework may be covered by a Coverdell ESA or a 529 plan, but general school supplies like pencils and notebooks do not qualify.
Technology costs may be eligible if necessary for coursework. If a school requires students to have a laptop or tablet, these purchases could be covered under a Coverdell ESA. However, if the device is primarily for personal use, it does not qualify. Internet access fees may also be eligible if explicitly required for schoolwork.
Specialized educational services, such as tutoring or therapy for students with learning disabilities, may qualify under certain tax-advantaged accounts. If a child has an Individualized Education Program (IEP) that mandates specific services, related expenses could be covered by a Coverdell ESA.
Documentation for K-12 Expenses
Thorough records of K-12 education expenses are essential when using tax-advantaged accounts. Without proper documentation, families risk IRS scrutiny or disqualification of tax-free withdrawals.
Receipts and invoices serve as proof of education-related expenditures. Schools, tutoring centers, and other providers typically issue detailed receipts specifying each charge. Using electronic payments, such as credit cards or bank transfers, can provide additional verification. Parents should also request itemized statements from schools to separate qualifying expenses from non-eligible costs.
Bank and investment account statements are important when using Coverdell ESAs or 529 plans. Withdrawals should be carefully tracked, with corresponding documentation showing that funds were used for approved expenses. If audited, the IRS may require proof that distributions were allocated correctly. Failure to provide sufficient records could result in tax penalties or retroactive taxation on previously untaxed earnings.
State-Level Tax Considerations
Tax treatment of K-12 education expenses varies by state, with some offering deductions or credits not available at the federal level. Some states provide tax incentives for private school tuition, homeschooling expenses, or contributions to state-sponsored education savings programs.
Several states, including Indiana, Illinois, and Minnesota, allow tax credits for certain K-12 education costs, such as tuition, textbooks, and instructional materials. In Minnesota, families with qualifying expenses can claim a refundable credit, meaning they may receive a refund even if they owe no state income tax. Indiana offers a nonrefundable credit, which can only reduce a tax bill to zero.
Other states focus on deductions rather than credits. Wisconsin permits a deduction for private school tuition, with limits based on grade level—up to $4,000 per child in kindergarten through eighth grade and $10,000 for high school students. South Carolina allows a deduction for homeschooling expenses, provided the curriculum meets state-approved standards.
Understanding state-specific tax benefits can help families maximize savings on K-12 education expenses. Checking state tax laws and consulting a tax professional can ensure families take full advantage of available benefits.