Minnesota is among the leaders in school choice in the country, though that’s not saying much.
Charter schools flourish, and the state has both a tax credit and a tax deduction program for education expenses.
A new report from the House Research department describes the two different tax plans.
Minnesota has both a tax credit and a tax deduction provision. A tax credit, of course, is better for the taxpayer than a tax deduction. The former reduces your tax obligation dollar-for-dollar, while the latter works only on the margins.
(For example, a $1,000 tax credit reduces your tax obligation by $1,000. A $1,000 deduction reduces the obligation of the person with a tax rate of 5 percent by, roughly speaking, $50. Big difference!)
Minnesota being Minnesota, the plans are “progressive.” The tax credit is available only for those with lower incomes; those households with an income above a threshold must make do with the tax deduction.
But the deduction has this going for it: it can be applied towards private school tuition. The credit cannot.
The deduction is not “refundable,” meaning that you must actually have a tax burden to qualify for it. That’s a blow to low-income families, who would be helped the most by any measure to allow for payments to private schools.
In either case, the tax provisions are modest: the average credit was $269 in 2005; the average deduction was $73.
One useful part of the House Research brief is a listing of similar provisions in other states.