Issue Background
In the past education IRAs were only used for higher education expenses, and contributions were limited to $500 per child, per year.

In the summer of 2001, Congress passed a large tax relief package that included positive changes to the education IRAs, now referred to as "Education Savings Accounts." The Economic Growth and Tax Relief Reconciliation Act (H.R. 1836) passed by Congress and signed into law as Public Law 107-16 by President Bush in June 2001 increased the maximum contribution from $500 to $2,000 per child, per year. It also allowed Education Savings Accounts to be used for expenses connected with K-12 education in public and private schools.

Qualified expenses-including tuition, tutoring, books, or computer hardware and software-remain the same for all grades and levels of education.

Under PL 107-16 some homeschoolers do not qualify for Educational Savings Accounts. Homeschool students qualify only in states where the law considers or provides an option for the homeschool to operate as a private school. These states include: AL, CA, IL, IN, KS, KY, LA, MI, NC, NE, OH, TN, and TX. (Note: In states where more than one option is provided the homeschooler may take advantage of the ESA only if they operate under the option which establishes the homeschool as a private school.)

Five other states CO, FL, ME, VA, WV, and UT recognize groups of homeschoolers as private schools, but individual homeschools can not act as a private school and thus do not qualify.

HSLDA has been working with congressional offices to fix this problem.