Qualified education expenses: Are college expenses tax deductible? What about tax credits?
Key Takeaways
While most college expenses are no longer tax deductible, there are still many education expenses that provide a tax benefit. For example, the Tuition and Fees Deduction is no longer available, but tuition and fees still count as qualified education expenses for the American Opportunity Tax Credit and Lifetime Learning Tax Credit.
College is an expensive endeavor. Luckily, some higher education expenses can be used to claim a tax credit or, in certain scenarios, a tax deduction. It’s important to know which expenses count and what documentation you need to keep so you can maximize your tax benefit. Read on for details.
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.
What is an education expense deduction?
An education expense deduction is a specific tax break that lets you subtract qualifying education-related costs from your taxable income, which helps lower your tax bill. It’s one of two main ways the IRS rewards taxpayers for investing in education — the other being education tax credits.
It’s worth understanding the distinction between deductions and credits because they work differently.
- A deduction reduces your taxable income. So, if you paid $2,500 in student loan interest, you may be able to deduct up to that amount from your taxable income, subject to IRS income limits and other eligibility requirements.
- A credit, on the other hand, reduces your tax bill dollar for dollar. So, if you qualify for the Lifetime Learning Credit, a $2,000 credit means $2,000 less in taxes owed.
Many education-related tax benefits today come in the form of credits (like the American Opportunity Tax Credit or Lifetime Learning Credit), while deductions are more limited and subject to specific eligibility rules. Check out our American Opportunity Tax Credit and Lifetime Learning Credit pages for eligibility information and more.
What education expenses qualify for a deduction?
Currently, there is only one category of education expense you can claim for a college student – the Student Loan Interest Deduction.
- Student Loan Interest Deduction – Deductible expenses include interest paid for a qualified student loan for you, your spouse or your dependent.
There is one education related deduction, but it’s available to educators vs. college students.
- Educator Expense Deduction -Deductible expenses include items such as books and classroom supplies, computer equipment, software and related services, professional development courses, and more.
Education deductions no longer available
One once-popular education deduction has expired and no longer apply:
- Tuition and Fees Deduction — This deduction, which once allowed eligible taxpayers to deduct up to $4,000 in tuition and fees, expired after the 2020 tax year and has not been reinstated.
How does an education expense deduction affect taxable income?
An education expense deduction reduces your taxable income, which may lower your overall tax liability. For example, if your income is $50,000 and you qualify for a $2,500 Student Loan Deduction, it would lower your taxable income to $47,500.
Are education expense deductions subject to income limits?
The Student Loan Interest Deduction is subject to income limits. This means your deduction may be reduced or eliminated depending on your modified adjusted gross income (MAGI).
- For all other eligible taxpayers except for Married Filing Jointly, the phase out starts at $85,000 and deduction is eliminated at $100,000.
- For a Married Filing Jointly filer, the phase out starts at $170,000 and the deduction is eliminated at $200,000.
What is considered a qualified education expense for a deduction or credit?
What counts as a qualified education expense depends on which tax benefit you’re claiming. The IRS has specific rules for each, and the differences matter.
See below where we breakout what count and doesn’t count for deductions – and credits.
Qualified vs. non-qualified expenses for education related deductions
| Qualified expenses | Non-qualified expenses | |
| Student loan interest deduction | Interest paid on a qualified student loan (up to the annual limit) | Loan principal repayments Interest on loans not used solely for qualified education expensesInterest paid by someone elseInterest on personal loans or credit cards used for education costs |
| Educator expense deduction (For educators, not college students) | Unreimbursed classroom expenses, including: Books and supplies Classroom materials Computer equipment, software, and services Other classroom equipment Professional development courses related to teaching PPE and disinfectant used in the classroom | Expenses reimbursed by your employer: Personal or non-classroom use items Home schooling expenses Expenses unrelated to K–12 instruction |
Qualified vs. non-qualified expenses for education related credits
| Qualified expenses | Non-qualified expenses | |
| American Opportunity Credit | Tuition required for enrollment Mandatory enrollment fees Books, supplies, and equipment (even if not purchased from the school but required for coursework) | Room and boardTransportation and travelInsuranceMedical expensesOptional fees not required for enrollment |
| Lifetime Learning Credit | Tuition required for enrollment Mandatory enrollment fees Books and supplies (only if paid to the institution as a condition of enrollment) | Room and board Transportation and travel Insurance Medical expenses Optional/non-required fees |
How do I claim an education expense deduction or credit?
- Gather the forms sent to you. You’ll use Form 1098-E for the Student Loan Interest Deduction and Form 1098-T for educational credits. If you’re an educator, you won’t receive any forms for your qualified expenses (ex. classroom supplies).
- Review your expenses. Confirm which expenses qualify based on the credit or deduction you plan to claim.
- Check eligibility requirements. Verify income limits, student status, and other criteria.
- Complete the required tax forms. Use Form 8863 for education credits. Include any applicable schedules for deductions
- Report the information on your return. Enter the amounts from your forms into your tax return to calculate the benefit.
- Keep your documentation. Save receipts, billing statements, and your 1098-T in case of an IRS inquiry.
Need help claiming education tax benefits?
Whether you choose to file with a tax pro or file with H&R Block Online, H&R Block can help you navigate education expenses on your taxes. We’ll help you get your maximum refund guaranteed.*
*All tax situations are different. Not everyone gets a refund. See hrblock.com/guarantees for complete details.
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