What Is the Minnesota K-12 Education Credit?

The Minnesota K-12 Education Credit is a state tax benefit designed to alleviate some of the financial pressures on families for educational expenses. This program allows eligible parents and guardians to receive a refundable credit on their state income tax return. The credit is calculated as a percentage of the specific costs incurred for a child’s kindergarten through 12th-grade education.

Determining Your Eligibility for the Credit

To qualify for the K-12 Education Credit, a taxpayer’s household income must fall below certain thresholds. For the 2024 tax year, the credit begins to phase out for households with an adjusted gross income (AGI) of $73,760. The final income limit depends on the number of qualifying children. For a family with one or two children, the AGI must be below $79,760, and this threshold increases for each additional child.

In addition to income rules, you must have a qualifying child. A qualifying child must meet the federal definition used for the Earned Income Credit, which involves tests for relationship, age, and residency. The child must have attended kindergarten through 12th grade during the tax year at a public, private, or qualified home school. The school can be located in Minnesota or a qualifying neighboring state, including:

• Iowa
• North Dakota
• South Dakota
• Wisconsin

Identifying Qualifying Educational Expenses

The credit is calculated as 75% of specific, approved educational expenses. Qualifying costs include fees for instruction that occurs outside the regular school day, such as academic tutoring, enrichment programs, and music lessons for a public school student if the school district does not offer a similar program. For private school students, tuition and fees for instruction can qualify.

Qualifying expenses also include instructional materials and equipment, such as textbooks, workbooks, and educational software. The cost of purchasing or renting required musical instruments for a school band is an eligible expense. For personal computers and educational software, a maximum of $200 per family can be claimed as a qualifying expense.

Certain expenses are disallowed and cannot be used to calculate the credit. Non-qualifying expenses include:

• The cost of school lunches, uniforms, and transportation provided by the family
• Fees for sports, games, or hobbies unless they are part of the school’s physical education curriculum
• Expenses for programs that primarily teach religious beliefs, such as confirmation or first communion classes

Claiming the K-12 Education Credit

To claim the K-12 Education Credit, you must complete and file Minnesota Schedule M1ED, K-12 Education Credit, with your state income tax return, Form M1. The form requires you to list each qualifying child and the total qualifying expenses paid for each one.

Schedule M1ED guides you through totaling expenses, applying the 75% rate, and calculating any income-based reduction. The final credit amount is then transferred to your Form M1 tax return to reduce your tax liability or increase your refund.

You should maintain records of all claimed expenses, as the Minnesota Department of Revenue may request to see proof of payment. You should save all itemized receipts, invoices, and canceled checks that substantiate your qualifying costs. These records should show the date, amount, vendor, and a description of the purchase.

The Minnesota K-12 Education Subtraction

Separate from the credit, Minnesota offers the K-12 Education Subtraction, which provides a different form of tax relief. This benefit is a subtraction from income, which means it reduces your overall taxable income rather than directly reducing the amount of tax you owe. The subtraction has no income limit, making it available to families who earn too much to qualify for the credit.

The subtraction allows for a broader range of qualifying expenses compared to the credit; notably, private school tuition is a qualifying expense. The maximum amount you can subtract depends on the grade level of your child. For students in grades K-6, the maximum subtraction is $1,625 per child, and for students in grades 7-12, the maximum increases to $2,500 per child.

Like the credit, the subtraction is claimed using Minnesota Schedule M1ED, but the expenses are entered on a different part of the form. You cannot claim the same expense for both the credit and the subtraction. Taxpayers must choose which benefit to apply for each specific expense.