New Tax Credit Offers Families Up to $11,500 Annually for K-12 Tuition and Supplies

The newly proposed Education, Achievement, and Opportunity Act introduces a major federal income tax credit designed to make K-12 education more affordable—specifically, by helping families pay for private, religious, or public school expenses. This isn't a deduction; it’s a direct credit against your federal tax bill, which is a much bigger deal for families who qualify.

The $11,500 Back-to-School Budget Boost

Here’s the core of the deal: If you pay tuition or fees for a qualifying child to attend elementary or secondary school, you can claim a tax credit on those expenses. The cap is set at $10,000 for tuition and related fees per child. On top of that, you can claim up to an additional $1,500 for specific non-tuition items like required computers, educational software, necessary books, academic tutoring, and even transportation fees charged by the school. That means a potential maximum claim of $11,500 per kid, per year.

Crucially, the definition of a “qualified school” is broad. It includes public, charter, private, parochial, and religious schools. This bill is explicitly structured to support parental choice by making tuition at private and religious institutions more financially accessible. However, the credit is laser-focused on academics: expenses for non-academic activities like sports teams, clubs, insurance, and school uniforms are explicitly excluded. So, that $500 fee for your kid’s travel soccer team? Still coming out of your pocket.

Who Gets the Full Benefit? (And Who Gets Phased Out)

Like most tax breaks, this one isn't unlimited—it's aimed squarely at middle and upper-middle-income families. The credit starts to disappear if your Modified Adjusted Gross Income (MAGI) goes too high. For married couples filing jointly, the phase-out begins at $150,000 MAGI. For single filers, the threshold is $75,000. The credit amount you calculated gets reduced by $50 for every $1,000 your income exceeds that limit.

If you're a couple making $140,000 and paying $10,000 in tuition, this credit is a huge win. But if you’re a joint filer making $200,000, you’re already $50,000 over the limit, meaning your $10,000 credit would be reduced by $2,500 ($50 multiplied by 50 increments of $1,000). The higher your income, the less you benefit, until the credit vanishes entirely for high earners.

The Catch for Existing Savers and Public Schools

If you're already using tax-advantaged savings accounts to pay for K-12 costs, you need to be careful not to double-dip. If you pull money tax-free from a Coverdell Education Savings Account to pay for tuition, you must reduce the amount you claim for this new tax credit by that same amount. You can use the Coverdell or the new tax credit, but not both for the same dollar of expense. This complicates things for families who have been diligently saving for years using existing tools.

From a policy perspective, this bill represents a shift in how federal dollars support education. By offering a tax credit for tuition, the government is effectively using the tax code to subsidize private and religious school attendance. While this is a clear benefit to families seeking choice, it functions as a tax expenditure—money that isn't collected—that could otherwise be used for general public services, including funding for the public school system itself. This structure raises the perennial question of how much federal policy should support private options versus strengthening the public system that serves the majority of students.