As Tax Day draws near you may wonder if you’re claiming every tax deduction possible. Families of dependent college students and independent college students often want to know if their college tuition is tax deductible.
Is Tuition Tax Deductible
At one point, tuition and fees were tax deductible as part of the Further Consolidated Appropriation Act. Under this amendment, and in years prior, eligible taxpayers were able to deduct as much as $4,000 of qualified education expenses.
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 cancelled the tuition and fees deduction.
Congress House Bill 133, section 104, eliminated the tuition deduction for future tax years, including this filing year.
Approved College Expenses for Tuition and Fees Deduction
Costs covered as an approved deduction expense included tuition and student fees required to attend an approved college or university. Textbooks, student supplies, and equipment necessary to complete college coursework were also considered eligible expenses.
Also, 529 college savings account holders could have claimed tuition and fee deductions, if the deductions claimed were not used with these savings funds.
Education Savings Bond Program
New for the 2023 tax year, the amount of your education savings bond interest exclusion is reduced or phased out based upon your modified adjusted gross income (MAGI) and filing status.
You can't exclude any of the interest if your MAGI is $106,850 or more ($167,800 or more if you file a joint return)
Tuition and Fees Deduction Limitations
As mentioned above, the Tuition and Fees Deduction is
no longer available. However, there are other tax benefits available today.
Other Education Expenses Tax Credits
Using the 1098-T form, provided to you by your university or college, you can choose from two types of education tax credits:
Student Loan Interest Deduction
Also new for the 2023 tax season, student loan interest deductions is reduced or phased out based upon your MAGI and filing status.
You can't exclude any of the interest if your MAGI is $106,850 or more ($167,800 or more if you file a joint return)
The American Opportunity Tax Credit
This education credit is for students working toward a degree, certification, or another approved credential program.
$2,500 credit for qualified education expenses
The Lifetime Learning Credit
This education credit is for students working toward more education of any kind—career development, vocational and technical programs, four-year degrees and more.
$2,000 credit for qualified education expenses
You cannot claim both credits in the same tax year.
For more information on taxes related to education, consider connecting with a personal financial advisor. Investopedia offers great tips to find the right service for you and/or your family.
Scholarships to Offset College Costs
For students and parents looking to cut expenses related to college, be sure applying for scholarships is part of your financial plan. Scholarships can be used to pay for tuition, fees, and most educational-related costs. This is, however, up to each scholarship provider.
In most cases, scholarships are non-taxable too.
Combining scholarships, financial aid, and tax credits is a great way to help lower the cost of college. Just as you create personal financial goals, establish a scholarship application goal as well. Many students start with a goal to apply for four scholarships per month.
Save time by creating a free Fastweb profile. Our algorithm matches students to scholarships that fit their unique circumstances—from family situations, heritage, interests, GPA and more.
