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In reversal, state says Tennessee vouchers aren’t taxable

The law is intended so that money from the vouchers be considered scholarships.

NASHVILLE, Tenn. — Reversing course, Tennessee’s Department of Education says school vouchers won’t be taxable.

Department spokeswoman Jennifer Johnson said Wednesday the law’s intent is that the money be considered scholarships not subject to taxation, and the department intends to structure the program accordingly.

Officials aim to resolve confusion after Education Commissioner Penny Schwinn said Monday her understanding was voucher payments were taxable. A lawmaker had asked if the payments need to be reported on parents’ federal income tax filings.

On Tuesday, Johnson said Schwinn meant to discuss the program’s possible “filing and issuance of federal information reporting returns.”

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Participating families cannot exceed twice the federal income eligibility for free school lunch to receive vouchers worth up to $7,300 annually for private education. The yet-to-be-implemented program is limited to Shelby and Davidson counties.

This story was originally reported by The Associated Press