Tax Credit, Tax Deductions and Sales Tax Exemptions

Tax Credit, Tax Deductions and Sales Tax Exemptions

Today there was much discussion about taxes at the Capital. House and Senate education committees heard bills on providing tax credits for donations to non-profits that would extend the K-12 education credit to include expenses spent on private school tuition.

Minnesota currently allows an income tax deduction for K-12 education related expenses up to $2,500 for each dependent in grades 7-12 and $1,625 for students in K-6. The current K-12 credit is approximately $13 million per year for Minnesotan’s.

The bill would provide tax credits and donations for both individuals and donations. It would allow an individual to make a tax-deductible donation to a qualified foundation. The foundation provides scholarships or make payments to a qualified school for the cost of a child’s tuition for enrollment.

The credit allowed would be equal to 70 percent of the amount contributed to a qualified foundation. The maximum annual credit would be $21,000 for married, joint filers and $105,000 for corporations.

Those who testified on behalf of the tuition tax credit bills fullsizerenderbelieve a choice to attend any school should be made by parents and families. Minnesota School Boards Association’s (MSBA) Grace Keliher testified, along with several other education organizations, against the bill. MSBA believes public education is funded by taxpayer dollars and should be held accountable to the state. Private schools are not held accountable to the state of Minnesota and consequently should not receive state money.  Keliher testified, if we are to expand tax credits to include tuition, we need to level the playing field between private and public school requirements and mandates.  

In the House Tax Committee, Rep. Urdahl introduced HF 301 seeking to reinstate and make the Minnesota State High School League (MSHSL) tax exemption permanent. Annually, the MSHSL would take the amount of sales tax from the ticket and admission sales and transfer it to the Minnesota State High School League Foundation and use it to provide grants and scholarships enabling students to participate in extracurricular activities. This bill was heard with no opposition in concept. It is also included in Governor Dayton’s bill; however, it is for a five-year period and not a permanent fund.

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