New Brief Recommends Extending Tax Breaks to Early Childhood Educators

Yahoo

05-05-2025

Every year, in December and in May, Susan Morice prepares a special project for her preschool class. 'I do it as a thank you to my parents,' she says. This past year for Mother's Day, Morice purchased flower pots and flowers to plant. For Christmas, she purchased rainbow candy canes and supplies to make Christmas ornaments. Since these projects are outside the preschool curriculum at the Meadows Elementary School near Omaha, Nebraska, where she works, she pays for these items out of pocket.
Morice has been a teacher for over 30 years, 16 of which she has been teaching pre-K; she estimates that she spends around $450 a year of her own money on non-reimbursed supplies like crafts, games, puzzles, books and toys for her classroom. She doesn't have access to a color printer at school, so she uses one at home to print out pages for her class.
Get stories like this delivered straight to your inbox. Sign up for The 74 Newsletter
It's not uncommon for educators to spend their own money on classroom supplies, which is why the U.S. tax code includes an educator expense deduction, allowing teachers in K-12 classrooms to deduct up to $300 a year on expenses that were not reimbursed. But Morice, like so many other early childhood educators, doesn't qualify to take the deduction. Though she works alongside other teachers in her school, doing virtually identical teaching work, she and other pre-K teachers aren't able to deduct their expenses.
Nationwide, early childhood educators earn, on average, less than half what their elementary school counterparts make, with a median hourly wage of $13.07. Thirteen percent earn below the poverty line, and almost half (43%) rely on public assistance. While policy debates about raising the wages of child care workers often center on bringing in more state or federal assistance, another option exists to shore up the industry using the tax code.
The education expense deduction is a federal income tax deduction of up to $300 annually for unreimbursed expenses (or $600 if two married educators are filing jointly). The teacher who buys poster board and markers for her classroom, or who enrolls in a continuing education class, can deduct those expenses. In response to the COVID-19 pandemic, qualified expenses also included PPE and disinfectant.
A new brief released by the Buffett Early Childhood Institute this month recommends allowing early childhood educators to take the deduction, arguing that the move would help retain workers by 'easing a portion of their financial burden' and 'demonstrating they are respected for the important work they do.' The brief also points to the problems with the existing recruitment and retention of early childhood educators: Because of the very low pay, there are significant employment challenges for businesses and families, resulting in 'billions of dollars of lost economic activity.' Evidence supports this — without access to child care, many people, especially women, cannot work for pay.
Walter Gilliam, executive director of the Buffett institute and a co-author of the report, believes the discrepancy caused by the tax laws contributes to early educators feeling there isn't sufficient respect in the field. Gilliam runs an ongoing survey of early educators, and of the 25,000 who responded, he estimated that over 90% would be able to take the tax deduction if it were available to them.
'They feel neglected, because they often are,' he said of early educators. He pointed to another example during the COVID-19 pandemic, when K-12 teachers were given priority for vaccinations and PPE supplies. Many early educators were skipped entirely, even though, in many cases, they were the ones showing up to work while many K-12 teachers were staying home.
'These kinds of things have huge implications for early childhood educators,' Gilliam said. The brief recommends that Congress extend the federal tax deduction to early educators, and that states consider providing their own tax deduction until a federal version is passed.
But could a $300 tax deduction make a meaningful difference?
Josh McCabe, the director of social policy at the Niskanen Center, a Washington, D.C.-based think tank, doesn't think so. 'I'm relatively confident this deduction wouldn't make a dent in the problem for a few reasons,' he said. 'It's unclear to me how many ECE workers are 1) spending out of pocket on non reimbursed supplies, 2) are in tax brackets that make a deduction like this more than nominally valuable, and 3) would have their retention decision impacted by this on the margin.'
And Gary Romano, the chief strategy advisor at Civitas Strategies, LLC, a group that provides tax education and business support, estimates that even with the tax deduction, the maximum amount that early educators would take home is an extra $66 a year. Romano explains that most child care providers max out at the 12% or 22% marginal tax rate, which would be the percentage they'd recoup on the $300 deduction, assuming they spent the maximum amount. He also noted that this is a personal deduction, not a business deduction, and many child care providers who work out of their homes already deduct supplies as a business expense.
Gilliam acknowledges that even though it's not a lot of money, showing early educators they are valued may go a long way toward supporting retention efforts. 'Do I believe that double digit savings in the pockets of early educators is going to keep them in their seats? Probably not. Do I think showing them a little bit of respect might help? Absolutely.'
Expanding the deduction would require Congressional approval, it's not a rule the Internal Revenue Service could expand on its own. Gilliam points to another survey he conducted about people who left the early education field. The top reason for leaving was compensation (54%), followed by not enough respect (39%). Other reasons included lack of benefits, lack of support for challenging behaviors, poor working conditions, and the need for more flexibility of hours.
Morice, the preschool teacher, has even greater confidence: She knows teachers who could take advantage of this deduction, and believes some 'need to count every penny.'
And for her, it's a basic issue of fairness that allows her to do her job well. 'I feel truly that if you want the best for these kids and start them out strong and give them a foundation, you have to give them the supplies to do that,' she said. 'We can't do it with one set of blocks all year.'