“In this world, nothing can be said to be certain, except death and taxes.” Benjamin Franklin wrote this sentence in a letter to a friend after writing about the legitimacy of the new U.S. Constitution. Some may say this is a pessimistic view of taxes, but one thing is sure: No matter what career path your students take, they will have to deal with taxes. If you browse social media, you will find all sorts of people discussing how they learned the quadratic formula but never learned how to do their taxes.
According to the Council for Economic Education’s 2024 Survey of the States, there are only 20 states that require students to take a standalone high school course in personal finance education. That means there are millions of students entering the workforce with little to no knowledge about budgeting, saving, investing, paying off debt, and handling income taxes.
Teaching students about taxes in high school is a great time to introduce the basics of income taxes and how they work. This article will explore education around paycheck terminology, different forms that students need to be aware of, deductions, tax returns, and the tax filing process.
Main Takeaways
- Financial education helps improve tax preparedness. Students will be better equipped when entering the workforce. They will learn how to manage their income, understand deductions, and increase their savings.
- Real simulations and applications like tax filing and paycheck analysis help students learn how to navigate adulthood.
- Utilizing interactive learning tools such as EVERFI’s FREE tax simulation resource can increase engagement and make your curriculum more relatable.
Table of Contents
- The Importance of Tax Education in High School
- Benefits of Teaching Students About Taxes
- Key Tax Concepts to Teach Your Students
- How to Keep Students Engaged in Tax Lessons
- Tax Lesson Plan Ideas for Teachers
- Use EVERFI’s Free and Interactive Tax Lesson Resource for Teachers
The Importance of Tax Education in High School
Teaching taxes to high school students is an important part of any personal finance curriculum. When I was teaching personal finance, it was Unit 2. I wanted to start it early in the semester because many of my students were already working jobs and getting pay stubs. Most students were confused when reading their pay stub and seeing tax money withheld. I remember one student, jokingly, saying, “I don’t remember the federal government working these hours for me.” The fact of the matter is that students and recent high school graduates are ill-prepared when it comes to handling their income taxes.
Taxes are one of the most complicated and confusing personal finance topics for everyone. The United States Federal Tax Code is almost 7,000 pages long.
According to Pew Research on Tax Facts in 2024:
- Over half of Americans are confused and anxious about filing their taxes.
- Most Americans feel like they overpay on taxes.
- Out of all federal agencies, the IRS is one of the least favorable in terms of public trust. The Internal Revenue Service (IRS) found that people who have had some education and instruction before filing taxes do so with fewer errors.
The Internal Revenue Service (IRS) found that people who have had some education and instruction before filing taxes do so with fewer errors.
Benefits of Teaching Students About Taxes
There are so many important benefits of teaching taxes to high school students. Financial literacy, improved decision-making, civic engagement, financial confidence, and successful “adulting” are some of the main benefits of having a tax unit in your curriculum.
Financial Preparedness
Students who understand taxes will have a better understanding of their future earnings, deductions, and credits. Being educated in taxes can help students navigate filings and increase their savings, so they are not paying too much in taxes. On the other side, tax education will help protect students from making mistakes and being audited in the future. Melissa Gordon, a financial literacy teacher from Michigan, reported that one of her students was able to complete their taxes thanks to her teaching. “My favorite is when they tell me they’ve opened up a Roth IRA or they used what we learned to complete their taxes. One student told me, ‘I was able to read my W-2 and understand what it says because we learned about it in class!'”
Improved Decision-Making
Once a student has some education in taxes, they can now make better decisions concerning their career, investments, expenses, and living situations. A student could properly assess job offers, the impact of moving to different cities and states, or whether they should start a business.
Civic Awareness
Taxes get a bad reputation because of the lack of education surrounding the topic. Students need to know that taxes help fund a lot of the things they use daily. Taxes fund schools, roads, our military, emergency services, and the overall function of our government and economy. Paying taxes is an important part of being a responsible citizen, and students need to be aware of this.
Confidence in Money Management
Not only will students have better preparedness when it comes to financial matters and improved decision-making, but they will also be more confident when it comes to managing their money. Having content knowledge is important, but the emotional part of finances plays a huge role in building money skills for life. PsychologyToday reports that emotions play a bigger role than logic and reason when it comes to financial success. Emotions like fear, greed, and anxiety are common feelings regarding money issues. Teaching students gives them not only the logic and skills they need, but also the confidence to help navigate tax situations and other personal finance topics.
Key Tax Concepts to Teach Your Students
Taxes lesson plans in high school should include types of taxes your students will pay, understanding their paychecks, and the basics of the filing process.
Types of Taxes
High schools only need to focus on a few taxes that are most relevant to students at this age:
- Income tax: Federal and state taxes that are deducted from a paycheck
- Sales tax: A tax placed on most goods that people purchase
- Property tax: A tax on owned property like land, homes, and vehicles, usually used to fund local services
Understanding Paychecks
Educators can use a mock paycheck to explain how earnings and deductions work.
- Gross income is the money earned before taxes are deducted.
- Net income is the “take-home pay” or the money earned after taxes are deducted.
- Teaching about a W-4 form will help students prepare for withholdings when applying for a job.
The W-4 form deserves a little more focus, as this can impact a student’s tax burden from their first paycheck. Students should be made aware of the allowances and exemptions. Some examples to think of: being single or married, having dependents, working multiple jobs, possible tax credits, or other special withholdings. The general rule of thumb for W-4 withholding:
- More allowances = less tax withheld. A person will receive more take-home pay and a smaller refund.
- Fewer allowances = more tax withheld. A person will receive a small paycheck but a larger tax refund.
Filing Basics
Filing taxes for the first time can be anxiety-inducing and intimidating. Things like tax brackets, deductions, marginal tax rates, and credits can be confusing to a first-time filer. An educator can demystify the process by using EVERFI’s FREE tax simulation resource. The resource has a tax filing interactive and goes over tax credits, taxes for gig workers, and investment taxes.
A teacher from Illinois said this about the EVERFI tax lesson: “It is fantastic to have access to lessons about taxes that enhance and expand learning outside the classroom. The simulation allows students to work through it at their own pace. It is a different delivery method for tax lessons for gig workers, investments, and cryptocurrency. It also allows students who might have struggled with the content in class a new way to learn and apply the information. As a teacher, it is fantastic to have free tools that help me differentiate my lessons and engage students.” — Josclyn Mohr, HS Consumer Education Teacher, St. Joseph, IL.
How to Keep Students Engaged in Tax Lessons
I taught eight different subjects in high school, but personal finance was my favorite. However, figuring out how to teach taxes to high school students can be tough. To make your content engaging, I recommend trying these methods:
- Use interactive and project-based learning activities like tax-simulations.
- Create real-world scenarios students can role-play in, like gig economy workers filing taxes or impacts on scholarships.
- Bring in guest speakers like accountants to discuss common tax filing mistakes, or business owners to share mistakes they’ve made.
- Use modern tech tools to gamify the learning process. There are all types of games, simulations, and free filing tools you can use.
- Hold debates about tax policy to increase civic engagement around taxes and promote critical thinking.
Tax Lesson Plan Ideas of Teachers
Here is a free tax lesson template you can use in your classroom. Adjust for your class needs:
Mock Tax Filing Exercise
Objective: Students complete a 1040 form using fictional data.
Step 1: Distribute (print copies or share digital copies) mock W-2s with varied incomes. You can pull the W-2 templates from the IRS website and use AI tools to come up with varied jobs and incomes.
Step 2: Students work through the provided pay stubs to calculate Medicare, social security, federal taxes, and state taxes.
Step 3: Students calculate the take-home (net) pay after all deductions.
Step 4: Guide students through the deduction process, like student loans or business expenses.
Step 5: Students can then compare refunds and liabilities in groups.
You can use the free digital lessons on EVERFI’s tax simulation as a resource. “The tax simulator does a great job of getting hands-on with the students to better understand this area that can be so difficult to understand in the life of growing up into a responsible adult.” Michael Copley, a finance teacher from Indiana, said that about the EVERFI tax lessons.
Explore EVERFI’s Helpful Tax Lesson Planning Resources for Teachers
Access EVERFI’s free interactive lesson module on taxes to unlock engaging resources for your classroom. EVERFI, in strategic partnership with Intuit for Education, worked to create the course Tax Simulation: Understanding Taxes™. This resource creates real-world scenarios, simulations, and lessons aligned with national standards. The lessons include TurboTax-inspired tax preparation software, instructions, teacher guides, and all the resources you need to create a fun, hands-on, and engaging tax lesson.
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Jack Woerner is a personal finance educator and consultant. He is a former high school personal finance and economics teacher. Jack designs financial curricula for organizations all over the globe. He has written guides, articles, and blogs as well as ghostwritten several books about financial literacy. Jack is passionate about teaching personal finance to everyone.