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School Vouchers

Glossary of Voucher and Tax Credit Terms

Private School Vouchers: Taxpayer dollars that are used to pay for all or part of the cost for students to attend private and, often, religious schools. Typically, the money comes out of funds for public schools. Private and religious schools have the option to decide whether to participate in voucher programs. If they do choose to participate, they retain the right to admit—or not to admit—a particular voucher student.

Low-Income Private School Vouchers: Taxpayer dollars that are used to pay for all or part of the cost for students from low-income families to attend private and, often, religious schools. Typically, the money comes out of funds for public schools. Private and religious schools have the option to decide whether to participate in the program. If they do choose to participate, they retain the right to admit—or not to admit—a particular voucher student. Some low-income voucher programs may require participating private or religious schools to charge voucher students no more than the amount of the voucher; other programs may allow participating schools to require voucher students to pay the difference between the voucher amount and the school's tuition.

Special Needs Tuition Vouchers: Taxpayer dollars that are used to pay for all or part of the cost for students with disabilities and/or special needs to attend a different public school or to attend a qualified private school. Some legislation also continues to place some obligation on the school district.

Tuition Tax Credits: A designated amount of money taxpayers may take as a credit on their state or federal income taxes for expenses associated with sending their children to private or religious schools; often, the credit is also available for public school expenses. However, the lion's share of the benefit would go to families who send their children to private or religious schools because their schooling expenses are higher than the education expenses of families who send their children to public schools. Tuition tax credits are worth more than tuition tax deductions, and they typically benefit wealthier families more than other families. Tuition tax credits also lead to a loss of state or federal tax revenue and thereby can lead to a reduction in funding for public schools or other vital public services.

Tuition Tax Deductions: A designated amount of money taxpayers may take as a deduction on their state or federal income taxes for expenses associated with sending their children to private or religious schools; often, the deduction is also available for public school expenses. However, the lion's share of the benefit would go to families who send their children to private or religious schools because their schooling expenses are higher than the educational expenses of families who send their children to public schools. Tuition tax deductions are of no value to individuals or families who cannot take deductions on their federal or state income taxes (typically, lower-income taxpayers), and therefore they benefit wealthier families almost exclusively. Tuition tax deductions also lead to a loss of state or federal tax revenue and thereby can lead to a reduction in funding for public schools or other vital public services.

Charitable Tuition Tax Credit: A designated amount of money taxpayers or corporations may take as a credit on their state taxes for contributions made to a private, nonprofit entity that provides vouchers for students to attend private or religious schools. This approach masks state funding of private and religious schools as support for charitable giving, but in effect it is state funding of private and religious schools and akin to vouchers.

Education Savings Account (K-12): An investment account, similar to a Roth IRA, where money to pay for public, private or religious school expenses can be saved. The account provides tax-free earned interest provided it is used for tuition or other education expenses. Education savings accounts generally benefit more-advantaged families, especially those who already have children in private schools.