The federal tax overhaul may have triggered an automatic state tax break that would allow parents to avoid paying state taxes on some of the money they put aside to send their children to private K-12 schools.
The new tax break would be an expansion of the tax break provided when parents save for college.
The state currently allows parents to avoid paying state income taxes on up to $10,000 each year that they put into a college savings account. In addition they do not have to pay taxes on the money when it is withdrawn to pay for college. These accounts, known as 529s, also are eligible for a less generous federal tax benefit. Parents and relatives can put after-tax money into these accounts and earn investment returns tax free.
The new federal tax law now allows parents to use the existing program to help pay for private K-12 tuition.