Qualified education expenses: Are college expenses tax deductible? What about tax credits?

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.

Which college expenses are tax deductible?

Due to tax changes in recent years, the rules around which college expenses are tax deductible or allow you to take a credit have changed. The list below covers categories of higher education expenses you may have questions about. Take a look to see which expenses still qualify as tax deductible.

• Qualified tuition and fees are no longer tax deductible after 2020. The Tuition and Fees deduction was an adjustment to income if you incurred qualified education expenses for you, your spouse, or your dependent.
• Work-related education expenses were previously tax deductible, but this deduction is not available for employees from 2018-2025 due to changes to itemized deductions with tax reform. Before this change, you may have benefitted from a deduction if the education was required by your employer or by law. However, if you are self-employed, you may be able to deduct education expenses. The education must enhance or improve skills related to your trade or business or must be required by law.
• Student loan interest, a college expense that generally applies in an after-college scenario, is still tax deductible. This college expense tax 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 have been 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?

Although key education expenses like tuition and fees are no longer tax deductible, you might be able to claim a credit by using the American Opportunity Credit or the Lifetime Learning Credit. Tuition and fees may be considered qualified education expenses, but the details can vary beyond those costs.

• American Opportunity Credit – In addition to tuition and required fees, you may 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. You must satisfy all requirements for the American Opportunity Credit to be able to receive the credit for these expenses.
• Lifetime Learning Credit – Included with qualified tuition and fees, you can count costs for course-related books, supplies, and equipment (including computers) required to be paid to the educational institution. Note that although the tuition and fees deduction is no longer available, starting in 2021 the income limits for the Lifetime Learning Credit have been increased, so the credit is now available for more students.

What doesn’t count as qualified expenses?

The Internal Revenue Service has rules for what you can and cannot deduct as a qualified expense. In general, insurance, medical expenses, transportation, and living expenses are not qualified school expenses for an education credit. 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 education tax credits. For details about college savings accounts and qualified expenses, check out our information about saving for college and reducing your tax bill.

Tax tip: Keep your documentation!

Schools will provide (via mail or electronic portal) the student with a Form 1098-T, which will reflect tuition and fees 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 choose to file with a tax pro or file with H&R Block Online, H&R Block can help you determine which college expenses are deductible. We’ll help you get the maximum tax benefit for your education-related expenses.