Tax season: in Indiana, private schools reign supreme

There’s nothing like doing your Indiana taxes to bring home the extent to which this state has tilted tax policy to benefit private schools. The state offers generous credits and deductions to taxpayers who spend money on the private K-12 schooling of their own or other people’s children — but not those who support public education.

There’s the private school/homeschool deduction, which lets taxpayers deduct $1,000 per child for the cost of “tuition, fees, computer software, textbooks, workbooks, curricula, school supplies … and other written materials” for children who are homeschooled or enrolled in private elementary or secondary schools.

Of course, parents who send their kids to public schools can’t deduct the often considerable costs that they pay for books, fees and supplies. Indiana remains one of a few states that require most public-school parents to pay for their children’s textbooks.

There’s also the school scholarship credit, good for 50 percent of any contribution to an organization that awards scholarships for students to attend private K-12 schools – with no limit on the amount of the credit per individual. An attempt by lawmakers to provide a similar credit for donations to foundations that support public schools was rejected by the Republican majority.

And the $250 federal tax deduction for money that educators spend out of their own pockets to provide books and supplies for their classrooms? Indiana doesn’t allow it. You have to “add back” that deduction before calculating your Indiana income taxes.

State Rep. Matt Pierce, D-Bloomington, and state Sen. Vi Simpson, D-Ellettsville, unloaded on the way state tax policy has shifted at a recent legislative update sponsored by the League of Women Voters of Monroe County, according to the Bloomington Herald-Times (subscription required).

“It is now the policy of the state of Indiana that private education is in front of public education,” Pierce said. “Read it in the tax policy.” The H-T reported that Simpson said state favoritism of private over public schools started several years ago but “went crazy” last session.

That 2011 session, of course, is when Indiana adopted the nation’s most expansive voucher program, shifting more than $16 million from public schools to private schools, almost all of them religious schools. It’s also the year the tax deduction for homeschooling and private-school expenses was adopted.

Advocates for these policies would no doubt point out that the biggest chunk of Indiana tax revenue still goes to public schools. Well, of course; that’s why we call them public schools. For more than 150 years in this country, public schools have been funded by the public and accountable to the public. Increasingly, in Indiana, private schools are being funded by the public, both through vouchers and tax incentives. But accountable to the public? Not so much.

Alex Molnar lecture

Of course, it’s not just Indiana that has been promoting privatization, choice and competition in American education. For a critical look at this trend, check out Alex Molnar’s public lecture Tuesday (March 6) at Indiana University Bloomington.

Molnar, director of publications for the National Education Policy Center at the University of Colorado, will speak on “Privatization, Politics and Policymaking in Public Education.” The lecture takes place from 2:30-4 p.m. in IU’s Wright Education Building Auditorium.

The author of annual reports on commercializing trends in education, Molnar spent 10 years directing the Education Policy Studies Research Laboratory at Arizona State University before moving to NEPC last year. His IU talk will be streamed live at

4 thoughts on “Tax season: in Indiana, private schools reign supreme

  1. Good post — but let’s not forget two points:

    1) there are tax deductions available to everyone paying for Indiana public schools through the property tax deduction and
    2) those people who do send their children to private schools are also helping financing the cost of public schools.

    I won’t argue that tax policy has shifted in the direction of private schools but to suggest that the policy favors private schools more than private schools is a slight stretch.

  2. I had to pay $1500 for my daughter to attend full day kindergarten this year at a public elementary school. If she would have attended half-day, it would have been free. Can I deduct the $1500 from my taxes in anyway?

    • Tracey, I’m not aware of a deduction for that, but I am NOT a tax expert. You should check with someone who is. Good news for other parents, but bad timing for you: The legislature just approved more funding for full-day kindergarten, which means public schools won’t be charging for this in the future. I’ll have a post about this in the next day or two.

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