Can Private Tuition Be Deducted from Your State Income Tax?
Some types of private educational expenses can be deducted, at least in part, from state and/or federal income taxes. The taxpayer must meet certain criteria to be eligible for the deduction. Additionally, four states allow for the deduction of public or private tuition expenses: Illinois, Iowa, Louisiana and Minnesota. In addition, where tax deductions are unavailable, taxpayers may qualify for education-related tax credits at the state and/or federal level.
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Qualifying Expenses
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Four of the 45 states with personal state income taxes offer tax deductions or tax credits for private education-related expenditures. This includes private primary and secondary school education as well as public or private post-secondary education including vocational or trade-school training. Typically, tuition and related fees and expenses are considered eligible expenditures.
Minnesota
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Minnesota offers a tax deduction as well as a tax credit to taxpayers with qualifying annual household incomes. For homes with annual incomes under $37,500, the state allows deductions of up to $1,625 for private elementary school tuition and $2,500 for secondary private school tuition. For families with annual incomes under $33,500, the state offers a tax credit equal to 75 percent of private education tuition fees for dependents in grades K-12. The credit maxes out at $1,000 per student or $2,000 per family. Households with incomes greater than $37,500 are allowed to take the tax deduction but are ineligible for the tax credit.
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Iowa
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Iowa offers tax credits equivalent to 25 percent of private tuition expenses for the first $1,000 of tuition a family pays each year. The fee is applicable toward tuition, fees and books for each child who is enrolled in a K-12 accredited nonprofit state-approved educational program. Religious education is excluded from the credit eligibility.
Illinois
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Illinois offers taxpayers state tax credits equivalent to 25 percent of private tuition expenses for a family with children attending a K-12 private school. Tuition fees must be greater than $250 per student and the credit is capped at $500. Illinois’ provision includes the cost of books and lab fees as well as actual tuition fees.
Louisiana
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Louisiana provides taxpayers with a $25 tax credit for tuition expenses incurred by each dependent child enrolled in a K-12 private education program.
Federal Tax Benefits for Education
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According to the U.S. Internal Revenue Service, taxpayers may be eligible to deduct the cost of private tuition a taxpayer pays for himself, a spouse or for a qualified dependent. Publication 970, Tax Benefits for Education, allows for the deduction of actual costs of tuition and fees or the application of an IRS Hope or Lifetime Learning Credit. If the educational-related expenses are for business purposes, taxpayers may be eligible to deduct tuition costs as a business expense. There are a variety of exclusions for these deductions. Taxpayers filing as married but filing separately are ineligible, as are individuals who are being claimed as a dependent on another taxpayer’s return. There are also income limits that may void eligibility for the deduction.
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References
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