Are Private School Expenses Tax Deductible?

To pay a private school tuition, most parents don’t have the luxury of setting up automatic payments and forgetting about it. For most, affording the cost involves several years of diligent planning and saving. Some have set aside savings from the Child and Dependent Care Tax Credit to put toward private school tuition, and many take advantage of scholarships.

When parents explore what cost-saving options are available to them, they often ask if private school tuition is tax deductible. For private school prior to college, the answer is, “no, with some exceptions.” While more tax-deductible options are available for expenses related to college tuition, parents will find that there are limited options available for expenses related to secondary school tuition.

However, it’s worth asking the question and exploring what options might apply to your family. Here are three options available to Virginia residents:

Virginia529 Account

In the past, 529 accounts had to be used for expenses related to higher education. But, beginning in 2018, the Tax Cuts and Jobs Act opened the doors for 529 accounts to be used for K-12 private school tuition, as well.

If you established a Virginia529 account when your children were born, and contributed even small amounts regularly, you might have a substantial amount by the time your children are ready for high school. Virginia529 accounts aren’t taxed as they grow, nor are they taxed when used for qualified education expenses. Plus, you can deduct up to $4,000 per account per year from your individual Virginia income tax return, which could help ease the cost of private school tuition.

Special Education Tax Deduction

Your child might have special needs that require a private school education. Perhaps your child has a physical disability or a learning disability, which makes it difficult for him or her to progress in a traditional or public school setting. If so, you might qualify for a tax credit.

IRS Publication 502 explains that parents can include special education tuition in their medical expenses deductions. To qualify for the deduction, you must have a letter from your child’s doctor, which recommends that the child should attend the private school. The type of education that the school provides should be specially designed to help your child overcome his or her disability or impairment.

Virginia Education Improvement Scholarship Tax Credit

The Virginia Education Improvement Scholarship Tax Credit (VEISTC) program provides the opportunity for low- and middle-income students to attend schools of their choice. Students who are zoned for poor-performing schools can apply for a scholarship through one of VEISTC’s state-approved scholarship programs.

Each scholarship program has a different area of focus. For example, some scholarships fund tuition for students at Catholic or Christian schools. Others fund tuition for students at schools with special needs programs. To apply, select a scholarship program that most closely aligns with your child’s needs, and follow that program’s application process.

Each scholarship program is funded by private donors. These donors receive a state tax credit equal to 65% of the donation in the year the donation was made. For more information, consult the VEISTC Information page or the Virginia Alliance for Student Opportunity.

Affording the cost of private school tuition doesn’t have to come solely from parents’ income and cash reserves. Exploring scholarships and tax breaks can reveal several cost-saving options that will ease the financial burden for parents and open educational doors for students.

And, be sure to explore these options annually, as new developments could come up each year and save you several hundred or several thousand dollars. Check out our previous blog for more information on other ways to save on private school tuition.