Minnesota Homeschool Tax Credit: K-12 Education Credit and Subtraction Explained

Minnesota is one of a handful of states that gives homeschool families meaningful tax relief at the state level — not a token deduction, but two separate benefits that can together reduce your tax bill by over $1,500 per child. Most families know vaguely that something exists. Few know the rules well enough to claim the full amount.

Here's the complete breakdown of how both benefits work, what expenses qualify, what's excluded, and how to file.

Two Separate Benefits: Credit and Subtraction

Minnesota provides two distinct mechanisms for K-12 education expenses. They operate independently and have different rules. You can claim both in the same tax year, but you cannot claim the same expense for both.

K-12 Education Tax Credit

The K-12 Education Credit is a refundable tax credit equal to 75% of qualifying education expenses, up to a maximum of $1,500 per child. Because it's refundable, you can receive it as a refund even if you owe no Minnesota state income tax — which makes it one of the more valuable state-level education benefits in the country.

AGI income limits (2025):

• 1 or 2 qualifying children: AGI must be at or below $81,820
• 3 qualifying children: at or below $84,820
• Each additional child beyond 3: limit increases by $3,000

The credit phases out above these thresholds. If your AGI is above the limit for your household size, you do not qualify for the credit — but you may still qualify for the subtraction (no income limit).

What qualifies for the credit:

• Secular instructional materials (textbooks, workbooks, curricula)
• Educational software and subscriptions for academic subjects
• Scientific equipment (microscopes, telescopes, lab supplies)
• Musical instruments used for academic music instruction
• After-school academic tutoring by a qualified instructor
• Computer hardware purchased primarily for educational use

What does NOT qualify for the credit:

• Private school tuition
• Instruction fees paid to a private instructor during normal school hours
• Religious or faith-based textbooks and materials
• Furniture (desks, chairs, whiteboards, bookshelves)
• Parent seminars, curriculum fairs, or conference registrations
• Sports camps and physical activity programs
• Travel, lodging, or transportation
• Internet service fees

K-12 Education Subtraction

The K-12 Education Subtraction reduces your Minnesota taxable income, not your tax directly. The value depends on your marginal state tax rate. Maximum amounts are:

• $1,625 per child for students in grades K–6
• $2,500 per child for students in grades 7–12

There is no AGI income limit on the subtraction. High-income families who exceed the credit threshold can still claim the subtraction.

What qualifies for the subtraction (broader than the credit): Everything that qualifies for the credit, plus:

• Private school tuition
• Private instructor fees paid during normal school hours

The subtraction is slightly more permissive because it includes tuition and daytime instruction costs that the credit explicitly excludes. For homeschool families paying a co-op instructor or educational pod facilitator during school hours, those fees may qualify for the subtraction even when they don't qualify for the credit.

How the Two Benefits Work Together

You can claim both the credit and the subtraction in the same year, but the same expense cannot count toward both. A practical approach is to maximize the credit first (since it reduces tax dollar-for-dollar at 75%) and then apply any remaining eligible expenses to the subtraction.

Example: A family with two children in grades 6 and 9 spends $2,200 on homeschool curriculum and materials during the year. Their AGI is $74,000.

• Credit calculation: $2,200 × 75% = $1,650, capped at the $1,500-per-child max. Two children means up to $3,000 total credit is possible, but only $2,200 in expenses, so the credit is $1,650. However, the $1,500 cap applies per child, not per household. If $1,200 was spent on child 1 and $1,000 on child 2: credit = ($1,200 × 75%) + ($1,000 × 75%) = $900 + $750 = $1,650.
• Remaining expenses after applying to credit: $0 remaining (all expenses used for the credit).
• Subtraction: if the family also paid a $500 instructor fee during school hours (not eligible for the credit), that $500 qualifies for the subtraction for the grade 9 child.

The key constraint: any dollar used for the credit cannot also be subtracted. Track which expenses you're applying to which benefit before you file.

What You Must Keep

The Minnesota Department of Revenue requires documentation if you're audited. "I spent about $800 on curriculum" is not documentation. Keep:

• Itemized receipts for every purchase — date, vendor, item description, amount
• Grade level of the child the expense was for (different caps apply to K-6 vs. 7-12)
• Invoice or contract if you paid a private instructor or co-op
• A simple spreadsheet or folder with expenses organized by child and category is sufficient

Retain records for at least three years from the filing date.

How to File: Schedule M1ED

Both the credit and the subtraction are filed using Minnesota Schedule M1ED (Education Credit/Subtraction). You attach it to your Minnesota Form M1 individual income tax return.

Most tax software (TurboTax, TaxAct, FreeTaxUSA) includes M1ED as part of its Minnesota state return workflow and will walk you through the eligibility questions. If you're filing manually, the form is available on the Minnesota Department of Revenue website. Current-year instructions are in Fact Sheet 8a (credit) and Fact Sheet 8b (subtraction).

The form separates credit-qualifying expenses from subtraction-qualifying expenses and performs the calculations. Report each child separately since caps are per-child.

Common Mistakes

Claiming ineligible expenses. Internet fees, desks, parent conference registrations, and sports programs appear educational but are explicitly excluded by statute. Including them risks the entire benefit if audited.

Applying the same expense twice. If you claim a $300 curriculum purchase for the credit, you cannot also subtract it. The software usually catches this but it's your responsibility to track.

Missing the AGI threshold. The credit is income-limited. If your AGI exceeds the threshold, you're not eligible for the credit — but the subtraction is still available and has no income cap.

Not separating children's expenses. Each child has their own cap. Lumping all expenses together makes it impossible to apply the limits correctly, especially when children are in different grade bands (K-6 vs. 7-12).

Starting Homeschool in Minnesota

For families who are transitioning from public school and also want to understand how homeschool fits into the broader Minnesota legal framework — what paperwork to file, what the compulsory attendance law requires, and how to start legally — the Minnesota Legal Withdrawal Blueprint covers the full withdrawal process step by step. Understanding the tax benefits is part of the complete picture of what homeschooling in Minnesota costs and saves.

See more United States homeschool guides →