Is Homeschooling Tax-Free? No, But it Could Be Soon

6 4 minutes read

One of the primary concerns when raising a child is their education. While many students attend public or private schools, some parents may choose to homeschool their children for an alternative learning experience.

And lately, more and more parents are going the homeschool route.

According to the National Home Education Research Institute (NHERI), homeschooling has increased 36% in recent years, with over 3 million homeschool students currently enrolled in the U.S..

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But despite homeschool being on the rise, the IRS does not consider this method of education a “school.” The non-school status has barred homeschooling educators from claiming popular federal tax breaks, like 529 plans, which offer tax-advantaged savings for education.

However, that could change with the newly proposed House GOP tax bill, the Big Beautiful Bill Act. One of its provisions stipulates that 529 plans could be used for homeschool expenses. Plus, there may be more ways you can save on expenses as a homeschooling educator. Here’s more of what to know.

529 plan for kids: College, public, and private school

Currently, federal law allows tax-advantaged accounts like Coverdell Education Savings Accounts (ESAs) or 529 Savings plans to help pay for K-12 and higher education (and 529s may even be used for retirement, thanks to the SECURE 2.0 Act).

The benefit of contributing to these accounts is that they allow you to make tax-free withdrawals for qualified expenses, which include any interest the account accrues.

So what’s a “qualifying expense?” Below are some common examples that may be allowed for 529 plans (Note: Coverdells generally cover a broader range of qualified expenses).

Tuition (up to $10,000 annually for eligible K-12 institutions)
Books, school fees, supplies, and equipment required for enrollment
Room and board (for students attending at least half-time, off-campus rules differ)
Computers, software, and internet access
Special needs services and costs for registered apprenticeship programs

Although Coverdells may be used for homeschool expenses, their income limits may exclude many families from using these tax-advantaged savings accounts.

On the other hand, 529 plans have no income limits and can be used for public, private, or religious schools. But current federal law doesn’t allow 529 plan distributions to be used for homeschooled students (state laws may vary).

Instead, the IRS treats homeschool materials as “personal expenses,” similar to clothing or groceries. However, that could soon change if the House provision is approved by the U.S. Senate and President Trump.

Homeschooling tax breaks?

Historically, the IRS hasn’t provided federal tax breaks for homeschooled education.

While some states, like Illinois and Minnesota, offer state-level tax credits, there is very little federal tax relief for parents homeschooling their children in most of the U.S..

But, as mentioned, a provision in the House GOP tax bill would allow tax-exempt distributions from 529 savings plans for “additional educational expenses.” Elementary, secondary, and homeschooled students would be affected.

Qualifying educational expenses for these students could include:

Curriculum materials
Books and other instructional materials
Tutoring or educational classes outside of the home
Testing fees and fees for dual enrollment in a higher education institution
Online education materials
Educational therapies for students with disabilities

This tax provision is big news for those with K-12 children, especially those who homeschool.

Homeschool can be expensive

The average cost of homeschooling an elementary school student is $1,295 per year, according to a survey conducted by the Home School Legal Defense Association (HSLDA). Middle and high school student costs are even higher, at about $1,636 per year.*

Apart from Coverdell savings accounts, there are very few tax breaks to cushion homeschool expenses.

But even though parents of homeschoolers aren’t allowed to use tax-advantaged 529 plans, they still pay for public schools through property taxes. This has been a source of contention in the homeschool community for many years, particularly because:

Students who live in rural areas (and may have tougher access to schools) make up 41% of homeschoolers, and
About 15% of parents choose to homeschool due to their child’s physical or mental health challenges, according to the American Institutes for Research, a nonpartisan research organization.

Thus, a federal tax break, like that offered through a 529 plan, could provide homeschooling families with tax relief, particularly if the family pays into the public school system and/or homeschools out of necessity.

*The survey conducted by the HSLDA sampled 4,000 homeschooling families from all 50 states, Washington, D.C., and Puerto Rico. The families who responded had an average of two homeschooled students.

Homeschool cost savings for the upcoming school year

The Republican-led House bill, which would allow homeschool distributions from 529 plans, has advanced to the Senate for consideration. However, the so-called “One Big Beautiful Bill” is expected to face many revisions before final legislation may be reached.

In the meantime, here are several ways homeschool parents may save on K-12 education costs for the upcoming school year:

See if your state offers financial assistance, tax credits, or other options to help cover homeschooling expenses. You can visit your State’s Department of Revenue or Department of Education websites for details.
Enroll your child in city or town-led extracurricular activities if available. Programs sponsored by the local government may be more cost-effective than privately led alternatives.
Sites like Easy Peasy Homeschooling offer free curriculum options and printable materials for homeschool educators. These resources may be used in conjunction with lesson plan materials.
Retailers like Barnes & Noble and Target sometimes offer promotional codes for homeschooling parents and educators. To use these discounts, you’ll need to sign up for an account and verify your teacher status with a homeschool ID or similar method of verification.

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