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Wondering which education tax credits you might qualify for during this year? Here are the most common education credits and deductions.
Education Tax Credits & Deductions Overview
As a parent, a guardian of a school-age dependent, a student in K-12 or in college, an adult continuing their education, or a teacher, if you’re involved in the education system in any way, it pays to understand how the tax code might affect your academic career. Here are several credits and deductions you might be able to take advantage of if you’re a student, parent, guardian, or teacher.
Coverdell Education Savings Account (ESA)
You can set up a Coverdell Education Savings Account for a child under the age of 18 if your modified Adjusted Gross Income (AGI) is less than $110,000 as an individual or less than $220,000 for married couples filing a joint return. Anyone, including the child, can contribute to the account during the year. The maximum contribution is $2,000 per beneficiary. Contributions are not tax deductible but, withdrawals will be tax-free when used to pay the beneficiary’s qualified education costs for elementary, secondary, college, or graduate school.
Education Expenses – Tuition Payment Verification
Generally, students will receive a Form 1098-T, Tuition Statement, which reports the amount of tuition and required fees paid for/by the student to attend school. The form includes any scholarships or grants received, whether the student is a part-time or graduate student, and if any of the payments were for January through March of the following tax year. Students challenged by the IRS to prove education expenses may need more than the 1098-T issued by their college or university. Receipts from the school showing the amounts paid for tuition and fees can help with verification. Canceled checks or bank statements are also good records. If payments included amounts for charges other than tuition and fees, you should save a copy of billing documents from the school that break down the charges individually.
Educator Expenses – Tax Deductions for Teachers
If you are an elementary or secondary school teacher, instructor, counselor, aide, principal, or interscholastic administrator or coach and you have worked at least 900 hours during a school year, you may deduct up to $350 of the cost of books, supplies, computer equipment (including software and services), and other materials used in the classroom. These expenses can be deducted directly against your income without itemizing deductions. The remaining expenses can be deducted as an itemized deduction. Each qualified taxpayer may deduct up to $350 in expenses on a joint return.
You may be able to claim a deduction of up to $2,500 for interest paid on a qualified student loan. Only the amount of interest actually paid during the year may be deducted.
Employer-Provided Educational Assistance
This benefit allows education assistance up to $5,250 per year to be provided by an employer to an employee without being taxed.Any work-related employee expenses are no longer eligible for deduction
Lifetime Learning Credit (LLC)
If you paid expenses related to college, graduate, or vocational school you may be able to claim the Lifetime Learning Credit. This is a non-refundable credit of up to $2,000 (per return) of qualified tuition, fees, and expenses you paid for yourself, spouse, or a dependent. Unlike the American Opportunity Credit, you do not have to be in a degree program, a full-time student, or in the first four years of post-secondary education. In addition, your modified AGI cannot be more than $90,000 if single or $180,000 for married couples filing a joint return.
American Opportunity Credit (AOTC)
The AOTC is a partially refundable credit for qualified education expenses for the first four years of higher education. The maximum credit is up to $2,500 per eligible student, calculated as 100% of the first $2,000 of expenses and 25% of the next $2,000. Up to 40% of the credit, or $1,000, may be refundable. To qualify, students must be pursuing a degree and enrolled at least half-time and not have any felony drug conviction. Full credit is available for those with a Modified Adjusted Gross Income (MAGI) of $80,000 or less ($160,000 for married filing jointly), with the credit phasing out at higher incomes and becoming unavailable at $90,000 or more ($180,000 for joint filers). Qualified expenses include tuition, fees, and course materials, but not room and board.
Qualified Tuition Program
A Qualified Tuition Program (QTP), also referred to as a 529 plan, allows you to prepay a student's college tuition or contribute to a higher education savings account. Up to $20,000 per year per beneficiary can be withdrawn tax-free for elementary or secondary school tuition. A lifetime maximum of $10,000 per beneficiary can be used to pay qualified student loans. Contributions are not tax-deductible on the federal return, but distributions will be tax-free if the distributions are used to pay for qualified higher education expenses. Some states allow a tax deduction for contributions on their state returns.
Student Loan Interest
You may be able to claim a deduction of up to $2,500 per return for interest paid on a qualified student loan. Only the amount of interest actually paid during the year may be deducted. You cannot claim the deduction in any tax year in which another taxpayer claims you as a dependent. You do not need to itemize deductions to claim this deduction. The credit amount is subject to a phase-out, on Modified Adjusted Gross Incomes (MAGI) above $85,000 for single taxpayers and $175,000 for married couples filing joint returns. Taxpayers filing using the Married Filing Separately status do not qualify.
The federal tax exemption on student loan forgiveness expired on December 31, 2025. Any loan balances forgiven through Income-Driven Repayment forgiveness or IDR plans or similar programs after this date may be considered taxable income by the IRS. Some education loan repayment plans continue to exist and are based on when the education loan was taken out.
TAX FILE MINUTE: ANSWERS FROM A TAX INSIDER
8 Key Education Tax Deductions & Credits
About the Author
Sharon Brucker is a Senior Tax Research Analyst at Jackson Hewitt Tax Services who specializes in consumer income tax and estate and trust issues. A Certified Public Accountant (CPA) with a Master of Business Administration (MBA) and more than 35 years of experience, Sharon helps to ensure that the most current IRS tax information is distributed throughout Jackson Hewitt and its franchisees. She also simplifies complex tax laws for Tax Pros and clients alike.
*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.
