When it comes time to do their taxes, millions of educators have had the satisfaction of checking a box that saves them some money, and isn’t available to people in other professions. The tax bill proposed by House Republicans would eliminate the $250 deduction teachers can claim for classroom supplies—and educators aren’t taking to it kindly.
We spoke with Internal Revenue Service officials to try to get a handle on what exactly the tax law says and what it means for teachers. Here’s some of what you need to know about the “educator expense deduction.”
1. Who can take the tax deduction? And what can they take it for?
K-12 teachers, principals, counselors, and aides who worked in schools for at least 900 hours a year (or an average of about five hours a school day) can currently take the tax deduction.
They can deduct up to $250 annually for books, supplies, computer hardware and software, and “other supplementary materials” that they purchased for their classrooms and were not reimbursed for by their district. They can also deduct for any out-of-pocket professional-development expenses. Health and physical education teachers can also use the deduction for athletic supplies.
Two educators who are married and filing jointly can deduct up to $500 a year (though no more than $250 a person).
The deduction is somewhat unusual in that it’s “above the line,” meaning teachers don’t have to itemize to get it. It comes directly off of their taxable income.
The only other professions specifically mentioned on the tax form as being entitled to certain above-the-line breaks are National Guard and Reserve members, performing artists, and fee-basis government officials (such as a notary public, who is paid a flat rate for a service rendered).
That said, it’s important to understand that the educator benefit is not a credit, which would reduce how much money a person owes the government (or is owed) dollar-for-dollar. As an IRS spokesman explained, there are some situations where a tax deduction is more advantageous than a credit—in particular when it moves someone into a lower tax bracket.
2. What’s the history on this deduction? How long has it been around?
The deduction came into being 15 years ago with the Job Creation and Worker Assistance Act.
Sen. Susan Collins, a Maine Republican and member of the Senate Health, Education, Labor, and Pensions Committee, had heard from many teachers that they were spending hundreds of dollars out-of-pocket on classroom materials. Teachers rarely have enough work-related expenses to itemize their deductions, and so were unable to write off these expenses. Collins fought for the above-the-line tax deduction for several years, sponsoring legislation that was eventually rolled into the economic-stimulus package, which President George W. Bush signed in 2002.
In 2015, as part of the Protecting Americans From Tax Hikes Act, Congress made the deduction permanent. That means it no longer has to be extended every year or two. (It doesn’t, however, mean Congress can never get rid of it.)
3. How many teachers and other school employees actually claim the deduction?
The IRS says that about 3.7 million tax returns included the deduction for 2015, the most recent year for which data is available. That number could represent more than 3.7 million educators because teachers who are married to other teachers and filing jointly are only counted once.
In context, it seems like an impressive share of educators are taking the deduction. There are 3.8 million public school teachers in the United States, according to recent federal data, and about 425,000 private school teachers. (There are also about 90,000 principals and 100,000 school counselors—though these groups might be slightly less likely to take deductions for classroom supplies.)
4. How much does it cost the federal government?
The tax deductions will cost the government an estimated $210 million in 2017, according to the Urban-Brookings Tax Policy Center, a think tank in Washington.
For comparison’s sake, that’s about 0.3 percent of the U.S. Department of Education’s roughly $68 billion budget.
5. What are the arguments for ending the deduction?
Doing so would help the Republicans reach their goal of simplifying the tax code. It’s also part of a broader move to pay for tax cuts for individuals and corporations. For more on the proposed bill, head to the Politics K-12 blog.
It’s hard to say whether the deduction will be axed in whatever bill Congress passes. But things are moving quickly on the proposed legislation and the teachers’ unions, among other education groups, are taking this quite seriously.
Republican lawmakers have introduced a plan to change the federal tax code. What would these changes mean for teachers? Education Week’s Liana Loewus and Andrew Ujifusa discuss:
Librarian Holly Peele contributed to this report.
A version of this article appeared in the November 15, 2017 edition of Education Week as A Primer on the Teacher Tax Break