Is Private School Tuition Tax Deductible? A Comprehensive Guide

Are you thinking about sending your child to a private school? It's a big decision, and one of the biggest factors to consider is often the cost. Private school tuition can be a significant expense, and it's natural to wonder if there are any ways to make it more affordable.

Here's the reality: private school tuition generally can't be deducted on federal returns unless it's for a special‑needs child with a physician’s referral, then it falls under medical expenses. Still, there’s hope: around 700,000 students benefit annually from voucher and scholarship‑credit programs across states amidst over 4.7 million private school enrollments nationwide. 

This blog will provide you with valuable information and resources to help you navigate the financial aspects of private education.

Key Takeaways

• Private school tuition isn’t federally tax-deductible unless it's for special-needs education with a doctor's recommendation.

• State programs offer tax benefits, like Illinois, Louisiana, Wisconsin, Ohio, and more.

• Coverdell ESAs and 529 Plans allow tax-free growth and withdrawals for private school tuition.

• Scholarships + Tax Credits = Powerful Combo

Is Private School Tuition Tax Deductible? 

While the financial burden of private school tuition can feel overwhelming, the IRS does not allow most families to deduct these costs from their taxable income.

This video explores the potential tax deductions available for private school tuition. It provides a discussion on IRS rules and exceptions in claiming tax breaks. It offers valuable insights for individuals looking to understand tax benefits related to private education expenses.

Special Exceptions for Children with Special Needs

When it comes to children with special needs, all private school in the US offers some tax benefits. Here are the details that you need to know about it: 

• Medical Expenses: 

There's one exception to this rule. If your child has a disability and needs special education, the cost of private school might qualify as a medical expense. This means you might be able to deduct it from your taxes.

• Strict Rules: 

But there's a catch! It's not as simple as just writing off the tuition. You need a doctor's note that clearly explains why your child needs special education because of their disability. The amount you spend on tuition has to be more than 7.5% of your family's adjusted gross income (AGI). That's the amount of money you make before taxes are taken out.

• Keep Good Records: 

Because the rules are tricky, it's important to keep good records of all your expenses and your child's medical needs. You might need to show these records to the IRS if they ask.

Important Note: Tax laws can be complicated, and it's always a good idea to talk to a tax professional if you have questions about your specific situation. They can help you understand the rules and make sure you're claiming all the deductions you're entitled to.

While federal tax deductions for private school tuition are limited, many states offer their own tax benefits to help families save money. Let's explore some of these state-level opportunities.

Exploring State Tax Benefits for Private Education

Private school tuition can be a significant expense for families, but did you know that some states offer tax breaks to help make it more affordable? 

It's true! While there's no federal tax deduction for private school tuition, several states have created programs to help families save money on education expenses.

Here are some examples:

Illinois

Illinois offers a tax credit for educational expenses. This means that if you spend money on things like tuition, books, and supplies for your child's private school education, you can get some of that money back when you file your taxes.

The credit is equal to 25% of the amount you spend over $250, but you can't get more than $750 back in a year. So, if you spend $1,000 on educational expenses, you can get a $187.50 tax credit.

Louisiana

Louisiana lets you deduct some of your educational expenses from your taxable income. This means that the amount of money you have to pay taxes on is reduced, which can save you money.

You can deduct up to $5,000 for each child you have in private school. So, if you have two children in private school, you could deduct up to $10,000! However, starting in 2024, this deduction will increase to $6,000 per child due to recent legislation signed into law by Governor John Bel Edwards

Wisconsin

Wisconsin also offers a deduction for educational expenses. The amount you can deduct depends on your child's grade level. If your child is in kindergarten through 8th grade, you can deduct up to $4,000 per year. If your child is in 9th through 12th grade, you can deduct even more – up to $10,000 per year!

Ohio

Ohio offers a tax credit for private school tuition, but the amount you can get depends on your family's income. Some families might qualify for a tax credit of up to $1,000! This means they can reduce the amount of taxes they owe by up to $1,000.

By taking advantage of these tax benefits, you can make private school education more affordable for your family.

Feeling discouraged by the lack of tax breaks for private schools?

If your state doesn't offer significant tax benefits for private school tuition, consider exploring homeschooling options. The School House Anywhere (TSHA) provides a comprehensive and engaging curriculum, American Emergent Curriculum (AEC), along with a supportive online community, at a cost that's often less than traditional private school tuition.

In addition to state tax benefits, there are also some smart savings strategies you can use to make private schools more affordable.

Alternative Strategies of Tax Benefits for Private School Tuition

Saving for your child's private school education can feel like a daunting task, but there are some smart strategies that can help you make it more manageable. Two popular options are Coverdell Education Savings Accounts (ESAs) and 529 Plans. These plans offer tax advantages and can help your money grow faster, making private schools more affordable.

Coverdell ESAs

Coverdell ESAs are tax-advantaged accounts designed to help families save for a child's education. Contributions grow tax-free, and withdrawals used for qualified education expenses are also tax-free. 

However, contributions are capped at $2,000 per child per year, and income limits apply. Families earning above a certain threshold cannot contribute. The funds must be used by the time the child turns 30 to avoid taxes and penalties.

Here are the key tax benefits from Coverdell ESAs:

• Contributions grow tax-free, maximizing savings over time.

• Withdrawals for private K–12 tuition, books, and supplies are tax-free.

• Offers a broad range of investment options to potentially grow your education fund faster.

• Helps cover various qualified education expenses beyond tuition.

• Age and income limits apply, so it’s best for middle-income families who start saving early.

529 Plans

529 plans are widely used savings accounts for education, now covering K–12 private school tuition in addition to college costs. They allow high contribution limits, varying by state, and offer tax-free growth on investments. While federal law doesn’t provide a deduction for contributions, many states offer tax deductions or credits. 

Families can withdraw up to $10,000 per child each year tax-free for K–12 tuition. 529 plans are managed either by the state or professional investment firms, making them simple for families who prefer hands-off investing.

Here are the key tax benefits from 529 plans:

• Investment earnings grow tax-free, boosting your savings power.

• Withdrawals up to $10,000 annually for K–12 private tuition are tax-free federally.

• Many states offer income tax deductions or credits for contributions.

• Professional management options make it easy for parents with limited investing experience.

• Flexible use: unused funds can be reassigned to another child’s education.

Using ESAs and 529 Plans Together

You can actually use both Coverdell ESAs and 529 Plans at the same time! This can be a smart strategy for maximizing your savings and making private schools more affordable. ESAs might be a good choice for covering your child's immediate K-12 expenses, while 529 Plans can be used for both K-12 and future college costs.

By understanding these tax-advantaged savings plans and using them strategically, you can create a solid financial foundation for your child's education.

Beyond tax breaks and savings plans, there are many other ways to find financial assistance for private schools.

Finding Financial Support for Private School Education

Several financial assistance programs, scholarships, and state-supported initiatives help ease the financial burden for private schools. Here are some available financial resources:

1. School-Based Financial Aid Programs

Many private schools offer need-based financial aid, funded through their own scholarship endowments or annual fundraising. Programs like those at National Association of Independent Schools (NAIS) member schools use services such as the Clarity or FACTS platforms to assess a family’s ability to pay and award financial aid accordingly. Parents should inquire directly with the admissions or financial aid office of their chosen school.

2. State-Funded Scholarship Programs

Some states offer scholarship programs to help offset the cost of private education. For instance, Florida's Family Empowerment Scholarship and Ohio's EdChoice Scholarship Program provide eligible families with thousands of dollars annually to cover tuition. Eligibility often depends on household income, special needs status, or attending an underperforming public school.

3. Tax Credit Scholarship Programs

States like Arizona, Georgia, and Pennsylvania have implemented tax credit scholarship programs. Through these, individuals and businesses receive tax credits for donating to nonprofit organizations that provide private school scholarships. Programs like Arizona’s School Tuition Organization (STO) or Pennsylvania’s EITC Program help thousands of students access private education each year.

4. Private and Nonprofit Scholarships

Numerous nonprofit organizations offer scholarships for private school students. The Children’s Scholarship Fund operates nationally, providing need-based scholarships for K–8 students. Regional programs like New York’s Inner-City Scholarship Fund and Los Angeles' Catholic Education Foundation specifically target low- and middle-income families seeking private religious education.

5. Special Needs Scholarships

Several states, such as Georgia and Florida, offer scholarships specifically for students with disabilities. Florida’s Unique Abilities Scholarship, for example, helps cover tuition for students with special educational needs to attend specialized private schools. These scholarships can cover both tuition and associated educational expenses.

6. Employer Tuition Assistance Programs

Some employers offer tuition reimbursement or education assistance as part of their employee benefits. While more common for college tuition, some large companies, hospitals, or religious institutions offer private K–12 education support for children of employees. It’s worth checking your benefits package or speaking with your HR department.

Families pursuing private school education have more support options than they might realize. By tapping into school-based aid, state scholarships, and nonprofit funds, parents can significantly reduce tuition costs.

Homeschooling with The School House Anywhere (TSHA)

The School House Anywhere (TSHA) is an educational program designed to provide high-quality, flexible, and portable learning experiences for homeschooling families, micro-schools, and education entrepreneurs. 

TSHA offers a comprehensive, developmentally aligned curriculum grounded in the American Emergent Curriculum (AEC). The AEC, developed by TSHA, is a hands-on educational framework for Pre-K to 6th grade. It connects subjects in real-world ways, encouraging children to explore, think creatively, and solve problems.

With us, you will get: 

• TSHA Educator Film Library:  300 How-to Teaching & Informational films.

• Custom AEC printable materials & worksheets.

• Access to our Online Progress, Organizing & Portfolio Management Tool: Transparent Classroom.

• TSHA Materials Boxes* (optional to purchase)

• Digital TSHA Welcome Box to get you started!

• Access to TSHA Member Site

• LIVE Educator & Founder Online Gatherings weekly with Q&A session (Recorded & posted for future reference!)

• Live scheduled office hours

• Parent / Educator online social media network & support

Also, we do not support AI for students, but we believe in the power of AI. So, we offer AI-supported services only for parents and teachers to make their teaching process smooth and time-efficient! 

Wrapping Up

Paying for private school can seem tricky, but don't worry, there are ways to make it easier! While you might not get big tax breaks from the federal government, you can still find ways to save money. Check if your state offers any tax breaks for private schools, and think about using special savings plans like Coverdell ESAs or 529 Plans.

Lots of schools and organizations also give out scholarships and financial aid, so be sure to ask about those. And if paying all the tuition at once is tough, ask the school if they have payment plans that let you spread out the cost.

Visit The School House Anywhere today to learn more and discover how we can support your homeschooling journey!

FAQs

1. Can I claim private school tuition as a charitable donation if the school is religious or nonprofit?

No, tuition payments cannot be claimed as charitable donations, even if the school is religious or nonprofit. The IRS views tuition as a payment for services received, not as a voluntary donation. Only contributions that are not tied to tuition or services may qualify as charitable deductions.

2. Are after-school programs or extracurricular activities at private schools tax-deductible?

Generally, fees for after-school programs, sports, or extracurricular activities are not tax-deductible. These costs are considered personal expenses, not qualified educational expenses for tax purposes. However, if part of a dependent care program, some fees might qualify for the Child and Dependent Care Credit.

3. Can grandparents contribute to a 529 plan for private school tuition?

Yes, grandparents can contribute to a child’s 529 plan, and their contributions will grow tax-free. Withdrawals for K–12 tuition are tax-free federally, although state tax treatment varies. This approach allows extended family members to help with education costs without giving direct tuition payments.

4. Does enrolling in an online private school affect eligibility for tax benefits?

Some state tax credits and scholarship programs may apply to accredited online private schools, but eligibility varies. It's important to confirm whether your state recognizes online private schools for tax benefits or scholarship programs. 529 plan withdrawals can still be used for online private K–12 tuition if the school qualifies.