June 10, 2019

Does Your State Offer Tax Credits for Private K-12 School Voucher Donations?


Eighteen states provide public support to private and religious K-12 schools through large tax credits for taxpayers who contribute money to K-12 school voucher funds. These credits range from 50 percent to 100 percent of the amount contributed, which far exceeds the tax benefit available for charitable contributions to other organizations such as homeless shelters or veterans’ groups.

For many years, high-income taxpayers were able to turn a profit by stacking additional federal and state tax breaks on top of these state credits, resulting in tax cuts larger than their contributions. In June 2019, the IRS finalized a regulation drastically curtailing this tax shelter, though additional work remains before it will be fully closed for investors who contribute stock or other property to private K-12 voucher funds.

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Read More: Education Tax Breaks