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.
Editor’s Note: This article was originally published on August 17, 2017.
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.
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 tax deductible if you’re re-filing your 2017 taxes. For tax years after 2017, however, the provision that allowed you to directly deduct these items has expired. But don’t discard these payment records— tuition and fees fall under what’s considered a qualified education expense for certain credits. See more on that lower in this post.
- Work-related education expenses were previously tax deductible, but this deduction is not available from 2018-2025 due to the changes to education with tax reform. Before this change, you could have claimed a deduction if the education was required by your employer or 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 be 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) paid to the educational institution.
What doesn’t count as qualified expenses? In general, insurance, medical expenses, transportation, and living expenses are not qualified school expenses. 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 tax credits for higher education. 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 and amounts that are billed by the school, and the 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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