Higher Education Tax Benefits for Tax Year 2025

Federal tax law provides several tax benefits that may reduce the cost of higher education for eligible taxpayers during the 2025 tax year.

The Internal Revenue Service summarizes these provisions in its official guidance titled Tax Benefits for Education Information Center.

Detailed explanations, eligibility rules, and examples for education-related tax benefits appear in IRS Publication 970, Tax Benefits for Education.

Education Tax Credits

Federal tax law allows certain taxpayers to claim education tax credits for qualified higher education expenses paid during the 2025 tax year.

The American Opportunity Tax Credit applies to eligible students enrolled at least half-time during the academic year and is explained by the IRS in its guidance on the American Opportunity Tax Credit.

The Lifetime Learning Credit may be available for undergraduate, graduate, and professional courses, as described in the IRS guidance titled Lifetime Learning Credit.

Taxpayers claim education credits by filing Form 8863, Education Credits with their federal income tax return.

The IRS also provides an eligibility review tool using the Interactive Tax Assistant for education credits.

Student Loan Interest Deduction

Taxpayers who paid interest on qualified student loans during the 2025 tax year may be eligible for a deduction that reduces adjusted gross income.

The IRS explains eligibility limits and reporting rules for this deduction in Topic No. 456, Student Loan Interest Deduction.

Student loan servicers generally report interest paid using Form 1098-E, Student Loan Interest Statement.

Education Savings Accounts and Plans

Certain tax-favored savings arrangements allow earnings to grow tax deferred and may provide tax-free distributions when used for qualified education expenses.

Qualified tuition programs, including 529 plans, are described by the IRS in its education benefits overview.

Coverdell Education Savings Accounts and related distribution rules are also explained in Publication 970.

Tax-Free Educational Assistance

Certain education-related payments may be excluded from taxable income when statutory requirements are met.

Employer-provided educational assistance programs are explained by the IRS in its guidance titled Frequently Asked Questions About Educational Assistance Programs.

Rules governing tax-free scholarships and fellowships, including which expenses qualify and which amounts may be taxable, appear in Publication 970.

Coordination of Education Tax Benefits

Federal tax law generally prohibits using the same education expense to claim more than one tax benefit during the same tax year.

The IRS explains coordination rules and provides examples illustrating these limitations in Publication 970.

Official IRS References

Taxpayers and practitioners should consult official IRS guidance when evaluating eligibility for education-related tax benefits for the 2025 tax year.

The primary IRS references include the Tax Benefits for Education Information Center and Publication 970, Tax Benefits for Education.

M. Spik

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25 years of experience managing tax, accounting, payroll, and employment-related information portals. Editor of Accounting Portal since 2011.
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