Private School Tuition Tax Break Analyzed

Beginning in tax year 2014, for state income tax returns due in April 2015, Wisconsin parents with children attending private schools were allowed a state income tax deduction for tuition paid up to $4,000 for K-8 students and $10,000 for high school students.

Qualifying taxpayers can subtract from their taxable income amounts paid to private schools for tuition and mandatory student fees. The private schools can be inside or outside of Wisconsin, although expenses for room and board can’t be deducted. The deductions are not based on need and are available to any individual or couple, regardless of income.

When the tuition tax break was enacted, it was estimated that the deduction would amount to a state income tax cut for the typical qualifying family of up to roughly $240 for each elementary school student and $600 for each high school student, according to a rough calculation by the the Legislature’s nonpartisan budget office.

In the 2013-14 school year, about 79,000 private-pay students were enrolled in private schools in grades K-8 with another 18,000 private-pay students enrolled in private high schools.

In tax year 2014, the first year this tax break was available, 37,240 tax filers claimed subtractions totaling $174.2 million. According to a recent analysis by the Wisconsin Taxpayers Alliance (WISTAX), the deduction resulted in reducing state income taxes owed by about $11.2 million.

That foregone tax revenue is in addition to the nearly $230 million Wisconsin’ three private school voucher programs together cost Wisconsin taxpayers annually (2015-2016 school year figures). Statewide, 32,260 students in 218 private schools are receiving vouchers in the 2015-16 school year, according to DPI figures.