Tax Deductions: Is College Tuition Tax-Deductible?

College costs continue to climb, placing a growing financial burden on families. For the 2025–2026 academic year, the average tuition and fees at a four-year public institution total $31,880 for out-of-state students, compared with $11,950 for in-state students. ¹ While families have limited control over rising tuition, certain college tuition tax deductions may help ease the overall cost of higher education.

A financial advisor can help you optimize a tax strategy for your education needs and goals.

Tax Credits for College Students 

There are two additional tax breaks that students in college (or their parents and guardians) might benefit from: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).

The American Opportunity Tax Credit

The AOTC allows parents (and students who aren’t considered dependents) to reduce their tax bill by up to $2,500 for up to four years. Since it’s a refundable tax credit, it can increase the size of your tax refund even if it reduces your tax liability to a negative number.

Independent students and parents can qualify for the AOTC if they pay for qualified education expenses used for undergraduate courses. However, the amount you’re allowed to claim depends on your modified adjusted gross income (MAGI).

For the 2026 tax year, to get the full $2,500 credit, your MAGI cannot be higher than $80,000 (or over $160,000 for joint filers). These limits were the same during the 2025 tax year.

The Lifetime Learning Credit

The LLC, on the other hand, is a nonrefundable tax credit. This means that you can’t get a refund if the credit lowers your tax liability to an amount below zero. In which case, you would likely choose the AOTC, if possible.

The LLC, however, proves useful for parents and students who can claim the credit if they’re paying for an undergraduate education, graduate school or technical school. Plus, there’s no rule saying that it can only be claimed for a certain number of years.

To get the full $2,000 LLC in 2026, your MAGI can’t be higher than $80,000 if you’re single or $160,000 if you’re filing a joint tax return, and the phase-out goes to $90,000 and $180,000, respectively. These limits also remain the same from previous years.

You’re ineligible for the tax credit if your filing status is married filing separately, you were a nonresident alien at some point during the year, or someone else is claiming you (or the student you paid for) as a dependent.

The Student Loan Interest Deduction 

Another helpful tax break for college graduates and their parents is the student loan interest deduction. For 2026, this deduction is worth the amount you paid in interest for your student loans, up to $2,500, which is the maximum deduction.

This deduction is subject to income phaseouts ranging from $85,000 to $100,000 MAGI for single filers and $175,000 to $205,000 MAGI for married couples filing jointly.

To qualify for the deduction, you must also meet the following criteria:

• You paid interest this year on a qualified student loan.
• You’re using any filing status except married filing separately.
• No one else is claiming you (or your spouse if you’re filing a joint return) as a dependent on their tax returns.

For a student loan to qualify for the deduction, you must have used the loan to pay higher education expenses for yourself or for one of your dependents (with only a couple of exceptions).

To calculate your exact deduction, you can use the Student Loan Interest Deduction Worksheet that the IRS provides. ²

The Tuition and Fees Deduction

The deduction for tuition and fees expired on December 31, 2020. However, taxpayers who paid qualified tuition and fees in 2018, 2019 and 2020 were eligible to claim a maximum deduction of $4,000. The loss of this deduction underscored how valuable a 529 college savings plan could be for reducing future college expenses.

Taxpayers could receive this tax break if they covered the cost of qualified education expenses for a college student, one of their dependents (as long as no one else claimed the dependent on their taxes), or their spouse. Qualified education expenses included tuition and other required fees that students had to pay to attend a particular institution. However, expenses paid with a scholarship or another tax-free award were not deductible.

Taxpayers were ineligible for the tuition and fees deduction if they and their spouse filed separate tax returns or if they were nonresident aliens for part of the tax year. Income limits also applied. If modified adjusted gross income (MAGI) exceeded $80,000 for single filers or $160,000 for joint filers, the deduction was unavailable.

This was also an above-the-line deduction, meaning taxpayers did not have to itemize deductions to benefit from it.

Bottom Line

The deduction for college tuition and fees has not been available since Dec. 31, 2020. However, you can still help yourself with college expenses through other deductions, such as the American Opportunity Tax Credit and the Lifetime Learning Credit. College graduates can also deduct the interest that they pay on student loans. The interest deduction does not require you to itemize your taxes. Beyond these credits, it’s very useful to have a 529 college savings plan to help decrease your out-of-pocket costs.

Tax Tips for College Students

• A financial advisor can help you manage the cost of college, set up college savings accounts and determine which deductions and credits you qualify for. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Start gathering financial documents early. Set a deadline for when you’ll have your W-2 forms, 1099 forms, investment income information, last year’s tax refund, student loan interest and the rest of the items listed on the IRS Tax Form checklist. By breaking the intimidating task of filing your taxes into smaller chunks, you have a better chance of avoiding a last-minute marathon session to meet the filing deadline.
• Educate yourself as soon as possible about what you can and can’t deduct from your taxes. It pays to know everything you can about how taxes impact your situation in order to maximize your tax return.

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