What education expenses are tax deductible?
At a Glance:
Some education expenses are tax deductible or may allow you to claim a tax credit. While new tax rules changed what’s available, student loan interest is tax deductible. Additionally, tuition and fees still count as qualified education expenses for the American Opportunity and Lifetime Learning credits.
College is an expensive endeavor. Luckily, some educational expenses can be used to claim a tax credit or deduction. Know which expenses count and what documentation you need to keep to maximize your tax deductions and credits.
Have other student tax filing questions? Be sure to visit our Tax Guide for College Students and find out about student forms that can be filed for free.
Which college expenses are tax deductible?
Given the tax changes in recent years, it’s important to check which college expenses are tax deductible or allow you to take a credit and which expenses no longer qualify. Check out the list below.
- Tuition and fees are no longer tax deductible after 2020. The tuition and fees deduction was an adjustment to income if you incurred qualified education expenses for you, your spouse, or your dependent. Such expenses must have been required for enrollment or attendance at an eligible educational institution. The deduction was 100% of qualified higher education expenses with a maximum of $4,000, $2,000, or $0, depending on the amount of your modified AGI and filing status. The phaseout for this deduction began at $65,000 ($130,000 for MFJ) for 2020. Prior to 2021, you could generally claim the tuition and related expenses deduction if you paid qualifying education expenses for higher education, paid the education expense for an eligible student, and the eligible student was you, your spouse, or your dependent.
- Work-related education expenses were previously tax deductible, but this deduction is not available for employees from 2018-2025 due to changes to itemized deductions with tax reform. Before this change, you may have benefitted from a deduction if the education was required by your employer or by law. However, if you are self-employed you may be able to deduct education expenses. The education must enhance or improve skills related to your trade or business or must be required by law.
- Student loan interest is still tax deductible. This college expense deduction lets you reduce your taxable income by up to $2,500 for qualified student interest paid during the year. In this case, qualified means the loan was only for education expenses, not for other types of expenses. The requirements state that the student must be the taxpayer, spouse or dependent. The student must have been enrolled at least half-time at an eligible institution and the program must lead to a degree, certificate or other recognized credential. Furthermore, the loan cannot be from a related person or a qualified employer plan. Find additional student loan interest deduction criteria.
What is considered a qualified education expense?
When you claim a credit, such as the American Opportunity Credit or the Lifetime Learning Credit, only certain types of educational expenses will count. Tuition and fees are commonly considered qualified education expenses, but the details can vary beyond those costs.
- American Opportunity Credit – In addition to tuition and fees, you can include expenses for books, supplies and equipment (including computers if required as a condition of enrollment)— even if they are not paid to the school.
- Lifetime Learning Credit – Included with tuition and fees, you can count costs for course-related books, supplies and equipment (including computers) required to be paid to the educational institution. Note that although the tuition and fees deduction is no longer available, starting in 2021 the income limits for the lifetime learning credit have been increased so the credit is now available for more students.
What doesn’t count as qualified expenses?
In general, insurance, medical expenses, transportation, and living expenses are not qualified school expenses for an education credit. Likewise, non-credit courses are not qualified education expenses, unless they are part of a degree program.
For more information about eligibility and requirements for these benefits, review our article on education tax credits. For details about college savings accounts and qualified expenses, check out our information about saving for college and reducing your tax bill.
Reminder: Keep your documentation!
Schools will provide (via mail or electronic portal) the student with a Form 1098-T, which will reflect tuition and fees amounts that the school receives in payment. You may also use payment receipts or any other kind of statements showing the payment of qualified education expenses.
Need help determining deductible college expenses?
Whether you need help determining what you can deduct or your eligibility for education-related benefits, we can help. Our knowledgeable tax pros are experts in uncovering all the credits and deductions available to you.
Make an appointment to speak to one of our tax pros today.
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