Given that a sweeping federal solution to the college affordability crisis does not appear to be on the immediate horizon, it is even more important that states take whatever steps they can to expand college access and affordability. While most of that effort will need to occur on the spending side of the ledger—such as through lowering tuition costs, expanding financial aid, or perhaps even funding free college outright—tax policy also has a role to play.
Education Tax Breaks
blog January 11, 2022
School’s In: Tackling College Affordability Through State Tax Codes
blog May 24, 2018
As IRS Prepares to Act, Red-State Taxpayers Profit from Use of SALT “Workaround Credits”
A new ITEP report explains the close parallels between the new workaround credits and existing state tax credits, including those benefiting private schools. The report comes the same day that the IRS and Treasury Department announced they would seek new regulations related to these tax credits. It notes that the SALT workarounds are emblematic of a broader weakness with the federal charitable deduction. And it cautions regulators to avoid a “narrow fix” that will only address the newest SALT workarounds (which, so far, have only been enacted in blue states) without also addressing other abuses of the deduction, which have long been employed by red states.
blog February 23, 2018
Why the Minute Federal 529 Provision Has Huge Consequences for States
When Republican leaders rushed through an overhaul to the federal tax code over a seven-week legislative period, they failed to acknowledge that many provisions in their bill would have negative consequences for states. One such provision of the Tax Cuts and Jobs Act that undermines state laws is the expansion of federal tax breaks that now allows taxpayers to use 529 savings plans to pay for private K-12 education.
brief February 23, 2018
Preventing State Tax Subsidies for Private K-12 Education in the Wake of the New Federal 529 Law
This policy brief explains the federal and various state-level breaks for 529 plans and explores the potential impact that the change in federal treatment of 529 plans will have on state revenues.
blog January 9, 2018
New Tax Law Allows Affluent Taxpayers to Write off K-12 Private School TuitionTaxpayers are still learning about the intended and unintended consequences of the major tax overhaul that Republican leaders ramrodded through late last year. One little-noted provision subverts state laws that…
blog December 14, 2017
Private Schools Donors Likely to Win Big from Expanded Loophole in Tax Bill
For years, private schools around the country have been making an unusual pitch to prospective donors: give us your money, and you’ll get so many state and federal tax breaks in return that you may end up turning a profit. Under tax legislation being considered in Congress right now, that pitch is about to become even more persuasive.
report December 14, 2017
Tax Bill Would Increase Abuse of Charitable Giving Deduction, with Private K-12 Schools as the Biggest Winners
In its rush to pass a major rewrite of the tax code before year’s end, Congress appears likely to enact a “tax reform” that creates, or expands, a significant number of tax loopholes. One such loophole would reward some of the nation’s wealthiest individuals with a strategy for padding their own bank accounts by “donating” to support private K-12 schools. While a similar loophole exists under current law, its size and scope would be dramatically expanded by the legislation working its way through Congress.
blog December 13, 2017
Parents of College Students: The Tax Plans’ Losers that No One Is Talking About
Parents of college students or kids in their last years of high school are more likely to face a tax hike than others under the tax legislation moving through Congress. Higher education has entered the tax debate because the House bill (but not the Senate bill) would repeal several provisions that make college and graduate education more accessible. But little thought has been given to how the tax bills would affect the parents of college students in more direct ways and make it difficult for them to finance college for their kids. If tax legislation were allowed a reasonable number of hearings and time for debate, this is exactly the sort of issue that could be addressed.
blog August 30, 2017
Private School Voucher Credits Offer a Windfall to Wealthy Investors in Some StatesState lawmakers who want to send public dollars to private schools have devised a shrewd tactic for getting around political and constitutional obstacles that make it difficult to do so.…
blog August 9, 2017
It’s a Fact: Voucher Tax Credits Offer Profits for Some “Donors”
In nine states, tax rewards gained by donating to fund private K-12 vouchers are so oversized that “donors” can turn a profit. This is the shocking but true finding of a pair of studies released by ITEP over the last year.
media mention May 17, 2017
New York Times: In Some States, Donating to Private Schools Can Earn You a ProfitAASA and the liberal-leaning Institute on Taxation and Economic Policy examined programs in 17 states that send more than $1 billion a year to private schools via tuition tax credits,…
news release May 17, 2017
Report: Private School Voucher Proposal Creates Tax Shelter for Wealthy; Would Starve Public Schools of Critical FundsA new report by the Institute on Taxation and Economic Policy (ITEP) and AASA, the School Superintendents Association, details how tax subsidies that funnel money toward private schools are being…
blog May 17, 2017
Investors and Corporations Would Profit from a Federal Private School Voucher Tax CreditA new report by the Institute on Taxation and Economic Policy (ITEP) and AASA, the School Superintendents Association, details how tax subsidies that funnel money toward private schools are being…
report May 17, 2017
Public Loss Private Gain: How School Voucher Tax Shelters Undermine Public Education
One of the most important functions of government is to maintain a high-quality public education system. In many states, however, this objective is being undermined by tax policies that redirect public dollars for K-12 education toward private schools.
report October 12, 2016
State Tax Subsidies for Private K-12 Education
This report explains the workings, and problems, with state-level tax subsidies for private K-12 education. It also discusses how the Internal Revenue Service (IRS) has exacerbated some of these problems by allowing taxpayers to claim federal charitable deductions even on private school contributions that were not truly charitable in nature. Finally, an appendix to this report provides additional detail on the specific K-12 private school tax subsidies made available by each state.
report March 22, 2016
Higher Education Income Tax Deductions and Credits in the StatesRead full report in PDF Download detailed appendix with state-by-state information on deductions and credits (Excel) Every state levying a personal income tax offers at least one deduction or credit…