House Passes $1,000 Tax Credit for Teachers

OKLAHOMA CITY – According to a survey by the U.S. Department of Education teachers spend at least $500 per year out of pocket for classroom supplies. The 2017 federal tax bill limited their ability to claim any of that money back. Today though a bill passed the State House of Representatives that aims to redress at least a small portion of that loss.

House Bill 2502, authored by House Speaker Charles McCall (R-22, Atoka), would provide a $1,000 itemized tax credit through which teachers can claim for classroom expenditures and fees associated with the teacher certification process. The credit will apply to teachers in grade K-12 public schools. In households with two teachers, both could claim the tax credit. The credit could be claimed for the tax year beginning January 1, 2020.

“Our teachers are spending a lot of their own money out of pocket to ensure their students have supplies, and we certainly intend to address classroom funding during the budgeting process,” said Speaker McCall. “But this is one way we can get money directly into the classroom and also help those teachers recoup those costs so they don’t have to choose between their families and their students.”

Despite the positive language surrounding the bill though, if signed into law the legislation would only reimburse a fraction of the monies teachers actually spend. Plus, changes made to the federal tax code in 2017 are likely to leave most teachers worse off

Unlike a reimbursement scheme that would refund the entirety of a teacher’s outlay, a tax credit simply shields from tax liability an amount equivalent to the teacher’s itemized spending. The net effect of the tax credit then is to return to the teacher only a small percentage of their initial outlay.

In addition, changes made to the federal tax code as part of the Trump administration’s 2017 Tax Cuts and Jobs Act will most likely mean teachers facing a higher overall tax bill, despite House Bill 2502.

Previously at the federal level teachers used to be able to claim any unreimbursed classroom spending above $250 as itemized deductions, as long as those expenses exceeded 2% of their adjusted gross income. The 2017 tax law though has suspended that option until 2025. Taken together with other federal changes any savings Oklahoma's teachers enjoy from today's vote will likely be outweighed by the extra tax liabilities owed as a result of the 2017 law.

House Bill 2502 passed out of the House by a vote of 96-0 and now heads to the Senate for their consideration. As the principal Senate author Senator John Michael Montgomery (R-32, Comanche County) will supervise the bill’s journey through the upper house.