Back-to-school shopping adds up fast from notebooks, calculators, laptops, instruments, and tutoring. A family’s bill can easily climb into four figures. The good news: Minnesota offers two tax benefits built for exactly this, and 2026 brings new federal options too. Here’s what you need to know before you file.
Minnesota’s K-12 Education Subtraction and Credit
Minnesota offers two tax breaks for K-12 education costs: the K-12 Education Subtraction and the K-12 Education Credit. You can claim both on the same return, but not for the same expense. Each dollar counts toward one or the other, not both.
The Subtraction (no income limit)
The subtraction lowers your Minnesota taxable income. Every qualifying family can use it, regardless of income. Maximum amounts:
- Kindergarten–6th grade: $1,625 per child
- 7th–12th grade: $2,500 per child
- 12th grade students who begin college during the tax year: $2,500
The Credit (income-limited, dollar-for-dollar)
The credit is worth more per dollar. It reduces your tax bill directly, rather than your taxable income. But it phases out based on income and number of children. For 2026:
- 1–2 children: phases out at $81,820 AGI
- 3 children: phases out at $84,820 AGI
- 4 or more children: phases out at $87,820 AGI, plus $3,000 per additional child
The credit maxes out at $1,000 per child, or 75% of qualifying expenses, whichever is less.
Bottom line: Lower-income families with fewer children usually come out ahead with the credit. Higher earners, or anyone who doesn’t qualify for the credit, should use the subtraction instead. If you’re not sure which is better, ask your CPA to run both numbers.
What Actually Qualifies?
Families often miss expenses that qualify or claim ones that don’t. Here’s the current list.
Qualifies for both the subtraction and the credit:
- Tutoring fees paid to a qualified instructor
- After-school enrichment programs (taught by a qualified instructor)
- Academic summer camp tuition, led by a qualified instructor
- Music lessons from a qualified instructor
- Driver’s education fees, if the class satisfies a school curriculum requirement
- Nonreligious textbooks and required instructional materials
- Musical instrument purchase or rental for a regular school class
- Field trip entrance fees tied to instruction
- Transportation fees paid to a third party for getting to and from school
- Home computer hardware and educational software
- All-day kindergarten tuition
Qualifies for the subtraction only:
- Private school tuition
- College course tuition that satisfies a high school graduation requirement
- Mandatory summer school instructor fees
- Fees for individual instruction by a qualified instructor during the regular school day
Does not qualify, for either benefit:
Room and board; religious instruction fees; sports camps and martial arts programs; cell phones and other general classroom items; school lunches; uniforms and clothing; overnight trip travel, lodging, and meals; daycare transportation; home internet service; non-educational software; and supplies bought for after-school or personal use.
Computer cap: Computers and educational software are capped at $200 under the subtraction and $200 under the credit — $400 total per household across both.
Keep your receipts. The Minnesota Department of Revenue can request proof, and a bank statement alone usually won’t satisfy an audit. Save receipts and invoices by child and category as you go.
New for 2026: Federal Changes
Federal tax law changed too, through the One Big Beautiful Bill Act (OBBBA). Here’s what’s new for families in 2026.
529 Plans Now Cover More K-12 Expenses
If you have a 529 plan, it now goes further:
- The annual K-12 withdrawal limit doubled, from $10,000 to $20,000 per child.
- New qualifying expenses include curriculum materials, textbooks, and online instruction; tutoring; testing fees (AP exams, ACT/SAT); dual-enrollment college courses taken in high school; and educational therapy for students with disabilities.
- 529 funds can also pay for certain professional credentials and apprenticeships.
Tip: Don’t double-dip. If you pay an expense with 529 funds, don’t also claim it for the state subtraction or credit. Use different expenses for each.
The Educator Expense Deduction Got Bigger
Teachers, coaches, and sports administrators: the above-the-line deduction rises to $350 per educator ($700 for married couples where both qualify). Expenses beyond that can now be itemized on Schedule A with no dollar cap, but only if you itemize. If you take the standard deduction, this extra part doesn’t help you.
Trump Accounts: New Savings Option for Kids
Starting July 2026, families can contribute up to $5,000 per year to a Trump Account for any child under 18, invested in broad U.S. stock index funds. Kids born between 2025 and 2027 get a $1,000 government-funded head start. Funds stay locked until the child turns 18. It’s not a school-supplies benefit, but it’s worth folding into your back-to-school financial check-in.
Action Steps Before You File
Talk to your CPA before you file especially if anything changed this year, like a new baby, homeschooling, or a child starting college coursework.
Keep every receipt, organized by child and category.
Sort expenses by which benefit they support — subtraction, credit, or 529 — so nothing is claimed twice or missed.
Run the numbers both ways. The credit isn’t automatically better than the subtraction, or vice versa.
Revisit your 529 strategy in light of the new $20,000 limit and expanded expense list.
Frequently Asked Questions
Can I claim both the K-12 Education Subtraction and the K-12 Education Credit?
Yes, but not for the same expense. Each dollar can only count toward one or the other.
Do private school tuition payments qualify for the credit?
No. Tuition only qualifies for the subtraction.
My child plays a school sport. Do uniform or equipment costs qualify?
No. Sports camps, uniforms, and athletic equipment don’t qualify for either benefit.
We homeschool. Are we eligible for these benefits?
Yes, as long as your homeschool arrangement meets Minnesota’s requirements for qualifying instructors and curriculum.
My child attends school in Wisconsin. Can I still claim a Minnesota benefit?
Yes. You can claim the subtraction or credit even if your child attends a qualifying school in Iowa, North Dakota, South Dakota, or Wisconsin.
What’s the cap on claiming a new computer for my child?
$200 under the subtraction and $200 under the credit — $400 total per household.
Can I use 529 funds and also claim the Minnesota K-12 subtraction or credit?
Yes, but not for the same expense. Pay one expense with 529 funds and a different one out of pocket for the state benefit.
Does the new $20,000 529 K-12 limit apply per child or per family?
Per child. Each child’s 529 account can withdraw up to $20,000 a year for qualifying K-12 expenses.
I’m a teacher. Does the higher educator expense deduction help me even if I don’t itemize?
The $350 (or $700 for eligible married couples) above-the-line amount, yes. The new unlimited Schedule A deduction only helps if you itemize.
What records do I actually need to keep?
Original receipts and invoices, labeled by child and category. A bank statement alone usually isn’t enough if the state asks for proof.
This article reflects Minnesota and federal tax rules in effect for the 2026 tax year, including changes introduced by the One Big Beautiful Bill Act (OBBBA). Tax law changes frequently — contact John A. Knutson & Co., PLLP for guidance specific to your family’s situation.