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Began Operation in 1955 (Deductions) and 1997 (Credit)
| FAST FACTS |
- Credits provide $15.5 million in 2006
- Deductions provide $15.8 million in 2006
- 58,500 claimed the credit in 2004 and 222,000 the deduction in 2005
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Minnesota provides a tax credit and a tax deduction covering educational expenses for students in any private or public school. The tax deduction lowers a family’s taxable income; the tax credit reduces the family’s total tax liability. They both cover books, tutors, academic after-school programs and other non-tuition educational expenses. The deduction also includes tuition payments at private schools, while the credit does not. The credit and the deduction make it a little bit easier for families to choose a private school for their children.
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| Scholarship or Voucher Value: |
The tax deduction is worth 100 percent of the amount spent on education (including private-school tuition), up to $1,625 per child in grades K-6 and $2,500 per child in grades 7-12. The tax credit is worth 75 percent of the amount spent on educational expenses other than tuition. The total amount that a family may claim is equal to $1,000 per child in the family. Also, the refundable tax credit is phased out for taxpayers earning more than $33,500. For families with one child, the family’s maximum allowable credit is reduced by one dollar for every four dollars of income above $33,500, and the family may not claim the credit at all if family income is above $37,500. For families with two children, the family’s maximum allowable credit is reduced by two dollars for every four dollars of income above $33,500, and again the family may not claim the credit if its income is above $37,500. For families with more than two children, the phase-out is still two dollars for every four dollars of income above $33,500, but the $37,500 income ceiling is raised by $2,000 for each child after the first two. For example, a family with four children may not claim the credit if its income is above $41,500. |
| Student or School Participation: |
About 58,500 families claimed the tax credit in 2004, and about 222,000 families claimed the tax deduction in 2005. The Minnesota Department of Revenue estimates that in 2006 the tax credit will provide $15.5 million, and the tax deduction will provide $15.8 million, to Minnesota families.
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| Student Eligibility: |
Any parent or guardian who spends money on approved education expenses for a child, including tuition, is eligible to receive the deduction. Parents must meet an income restriction to claim the credit; the income cutoff is $37,500 plus $2,000 for every child in the family after the first two. Also, parents must be tax filers and have proof of eligible expenses.
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| Legal Status of Program: |
In 1983, the U.S. Supreme Court ruled in favor of the tax deduction program. No additional legal challenge is expected.
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| Regulations on the Program: |
Expenses for religious instruction are ineligible for both the tax credit and the tax deduction. Schools may itemize expenses in order to separate religious instruction from other expenses, so that parents may claim the tax credit or deduction on the remaining expenses.
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| Research on Program: |
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| News on Program: |
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| Governing Statutes: |
Minnesota Statutes, section 290.0674 |
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