This bill allows a refundable tax credit of up to $10,000 per child for tuition and other educational expenses for both public and private elementary and secondary schools, with income-based limitations.
Christopher "Chris" Smith
Representative
NJ-4
The "Education, Achievement, and Opportunity Act" introduces a refundable tax credit for tuition expenses incurred for each qualifying child attending public or private elementary or secondary school. The credit is capped at $10,000 per child annually, with a phaseout for higher-income taxpayers. Qualified expenses include tuition, fees, and additional costs like computers, tutoring, and transportation, while excluding fees for activities, athletics, and uniforms. This amendment aims to support parents in choosing the educational environment that best suits their children's needs.
New Bill Proposes $10,000 Tax Credit Per Child for K-12 School Costs, Phases Out for Higher Incomes
A new piece of legislation, the "Education, Achievement, and Opportunity Act," proposes a significant change to how families might pay for schooling: a refundable federal tax credit for elementary and secondary education expenses. This bill would allow taxpayers to claim up to $10,000 per qualifying child each year for costs associated with attending public, charter, private, or religious schools (K-12). The core idea, as stated in the bill's findings (Sec. 2), is to support parental choice in education.
Digging into the Dollars: How the Credit Works
So, what does this look like practically? The proposed credit covers "qualified education expenses" (Sec. 3). This includes the big one – tuition and fees – but also things like required books, up to $1,500 for computer equipment and educational software, tutoring, services for students with disabilities, private school transportation (if the school provides it), and academic testing fees. It's important to note what isn't covered: costs for student activities, sports, insurance, uniforms, or non-academic after-school programs are excluded.
There's a cap of $10,000 per child, per year. However, this isn't a flat $10k for everyone. The credit amount starts decreasing for families with higher incomes. Specifically, the credit reduces by $50 for every $1,000 your modified adjusted gross income (MAGI) goes over $150,000 for joint filers or $75,000 for single filers (Sec. 3). Also, if you're already using a Coverdell education savings account for K-12 costs, the amount you can claim for this credit gets reduced by those Coverdell distributions.
Who Benefits and What Might Change?
This credit could offer substantial financial help, particularly for families paying tuition for private or parochial schools, or those incurring significant costs for tutoring or special needs support, regardless of the school type. Since it applies to expenses at any qualified K-12 institution, families with children in public schools could potentially use it for eligible costs like tutoring or necessary tech.
The income phase-out means the full benefit is targeted more towards lower and middle-income households. Families earning above the thresholds will see a smaller credit or none at all. For example, a couple filing jointly earning $170,000 would see their potential credit reduced by $1,000 per child ($20,000 over the $150k threshold / $1,000 * $50 = $1,000 reduction).
By potentially making private options more financially accessible, this credit could influence enrollment trends between public and private schools. It essentially provides a federal subsidy for certain K-12 expenses, aiming to broaden educational choices as outlined in Section 2 of the bill. If enacted, these changes would apply to tax years starting after the bill becomes law.