Tax Law Benefits

There are several tax benefits that provide help for those financing the costs of higher education.

Many of the benefits below have income level caps and there are restrictions on taking advantage of more than one deduction and/or education credit at the same time.

For more information, please consult a tax adviser and visit the IRS website.

  • Employer-paid tuition assistance for undergraduate and graduate coursework is tax-free up to $5,250.
  • Interest paid on student loans is deductible up to $2,500, regardless of the age of the loan.
  • The American Opportunity Tax Credit: Up to $2,500 credit available for qualifying educational expenses paid for the first four years of post-secondary graduate education for students pursuing an undergraduate degree or other recognized education credential.
  • A Lifetime Learning Credit: Up to $2,000 credit is available for qualifying educational expenses, limited to 20% of tuition and required fees paid for in any year of postsecondary education. This includes courses taken to acquire or improve job skills, even if the courses are not part of a degree program.
  • Students not qualifying for the American Opportunity Tax Credit or Lifetime Learning Credits may be able to deduct up to $4,000 of qualified tuition and fees paid for by the student, a spouse, or dependents, if modified adjusted gross income is not more than $80,000 if single or $160,000 if married filing jointly.