Tax Credits & Deductions

The Federal government and New York State offer tax credits for qualified undergraduate postsecondary study, as well as a tax deduction for the initial interest paid on qualified loans.

  • New York provides a tax credit or deduction to help New York resident taxpayers with college tuition.
  • The Federal government offers tax benefits in the form of the American Opportunity Credit, the Federal Lifetime Learning Tax Credit and the Federal Education Loan Interest Deduction.
Tax Credits/Deductions Quick Reference
New York State Tuition Tax Credit/Deduction Through the New York State Tuition Tax Credit/Deduction resident taxpayers may claim a deduction or a refundable credit for allowable undergraduate tuition paid for themselves, their spouse, or their dependents enrolled in qualified institutions.
American Opportunity Credit
(2012 - 2017 Tax Years)
The American Opportunity Credit applies for tax years 2012 through 2017. It provides a tax credit of up to $2,500 per student to offset qualified higher educational expenses available to more taxpayers, including those who owe no tax. 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 Credit Qualified 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 Deduction The 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 Program New York State residents may save for themselves, their children, grandchildren or friends. Withdrawals made by New York taxpayers are exempt from State and federal income tax when used for qualified higher education expenses. 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. Assets grow tax-deferred and withdrawals are exempt from federal income tax when used for qualified higher education expenses.
Education Savings Bonds Generally, you must pay tax on the interest earned on U.S. savings bonds. If you do not include the interest income in the year it is earned, you must include it in your income in the year in which you cash in the bonds. However, when you cash in certain savings bonds under an education savings bond program, you may be able to exclude the interest from income.