Education Tax Credits & Deductions

New York State college students and families can save money at tax time. Take advantage of federal education benefits and New York State education benefits.

 

  • Federal Tax Credits/Deductions
  • State Tax Credits/Deductions

The Federal government offers tax benefits for qualified undergraduate college study, including an IRS tax deduction on interest paid on qualified loans.

Federal Tax Credits/Deductions
American Opportunity Tax Credit (2012 - 2017 Tax Years)The American Opportunity Tax Credit (AOTC) applies for tax years 2012 through 2017 providing a tax credit of up to $2,500 per student to offset qualified higher educational expenses. The AOTC is also available to those who owe no tax in the form of a refund. The full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
Federal Lifetime Learning Tax CreditQualified taxpayers may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the number of years the lifetime learning credit can be claimed for each student.
Federal Student Loan Interest DeductionThe Federal Student Loan Interest Deduction provides up to a $2,500 tax deduction for the interest paid during repayment on a qualified student education loan.
New York’s 529 College Savings ProgramWithdrawals from New York’s 529 College Savings program for qualified higher education expenses are exempt from State and federal income tax. New York taxpayers, who are account owners, can also deduct up to $5,000 of contributions ($10,000 for a married couple filing jointly) on their state income tax return each year.
Education Savings BondsInterest income on U.S. savings bonds can be included on the tax return in the year it is earned, or in the year in which the bonds are cashed. Under the Education Savings Bond Program, certain bond interest may be excluded from income.

New York State offers tax benefits for qualified undergraduate college study.

State Tax Credits/Deductions
New York State Tuition Tax Credit/DeductionThe New York State Tuition Tax Credit/Deduction offers resident taxpayers a deduction or a refundable credit for allowable undergraduate tuition paid for themselves, their spouse, or their dependents enrolled in qualified institutions.
New York’s 529 College Savings ProgramWithdrawals from New York’s 529 College Savings program for qualified higher education expenses are exempt from State and federal income tax. New York taxpayers, who are account owners, can also deduct up to $5,000 of contributions ($10,000 for a married couple filing jointly) on their state income tax return each year.