Education Tax Credits & Deductions


The Internal Revenue Code provides both tax credits and deductions used to reduce the federal income tax burden for students, or those paying the costs of students, higher education. Credits directly reduce the amount of income tax owed, while deductions reduce the amount of taxable income.

Eligible expenses are tuition and certain related expenses required for enrollment or attendance at IU. Expenses for books, supplies, and equipment needed for a course of study are also eligible for a tax credit or deduction whether or not the materials are purchased from IU. Students must keep the receipts and report these expenses when filing a tax return. Eligible expenses do not include personal expenses (room, board, insurance, medical, travel, etc.)

Informational Resources


Comparison of Education Credits

  American Opportunity Credit Lifetime Learning Credit
Maximum credit Up to $2,500 credit per eligible student Up to $2,000 credit per return
Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly;  
$90,000 if single, head of household, or qualifying widow(er)
$127,000 if married filing jointly;  
$63,000 if single, head of household, or qualifying widow(er)
Refundable or nonrefundable 40% of credit may be refundable Credit limited to the amount of tax you must pay on your taxable income
Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2013 Available for all years of postsecondary education and for courses to acquire or improve job skills
Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) the Hope credit was claimed) Available for an unlimited number of years
Type of program required Student must be pursuing a program leading to a degree or other recognized education credential Student does not need to be pursuing a program leading to a degree or other recognized education credential
Number of courses Student must be enrolled at least half time for at least one academic period beginning during the tax year Available for one or more courses
Felony drug conviction At the end of 2013, the student had not been convicted of a felony for possessing or distributing a controlled substance Felony drug convictions do not make the student ineligible
Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment)
Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014