Claiming Education Tax Credits- A 2025 Guide

Worth up to $2,500 per eligible student per year.

Available for the first four years of post-secondary education.

Covers tuition, fees, and required course materials.

40% of the credit (up to $1,000) is refundable.

Income limits: $90,000 single/$180,000 married filing jointly (2025).

Worth up to $2,000 per tax return (not per student).

Available for unlimited years of education.

Covers tuition and fees only (not books or supplies).

Non-refundable credit - can reduce tax to zero but not below.

Income limits: $90,000 single/$180,000 married filing jointly (2025).

Allows deduction of up to $4,000 in qualified education expenses.

Available even if you don't itemize deductions.

Income limits apply - phase-out begins at $80,000 single/$160,000 married.

Generally less valuable than credits but may be useful in certain situations.

Eligible expenses include:

Tuition and required fees

Required course materials (for AOTC only)

Expenses paid with student loans count in the year paid, not borrowed

Expenses paid with scholarships reduce eligible expenses

Keep detailed records of all education expenses.

Obtain Form 1098-T from your educational institution.

Coordinate with other education benefits (529 plans, scholarships).

Taxcodes LLC can help you determine which education credits and deductions provide the maximum benefit for your situation.