Introduction

This publication explains tax benefits that may be available to you if you are saving for or paying education costs for yourself or, in many cases, another student who is a member of your immediate family. Most benefits apply only to higher education.

What is in this publication. Chapter 1 explains the tax treatment of various types of educational assistance, in- cluding scholarships, fellowship grants, and tuition reductions.

Two tax credits for which you may be eligible are explained in chapter 2 and chapter 3. These benefits, which reduce the amount of income tax you may have to pay, are:

• The American opportunity credit, and

• The lifetime learning credit.

Nine other types of benefits are explained in chapters 4 through 11. These benefits, which reduce the amount of income tax you may have to pay, are:

• Deduct student loan interest;

• Receive tax-free treatment of a canceled student loan;

• Receive tax-free student loan repayment assistance;

• Establish and contribute to a Coverdell education savings account (ESA), which features tax-free earnings;

• Participate in a qualified tuition program (QTP), which features tax-free earnings;

• Take early distributions from any type of individual retirement arrangement (IRA) for education costs without paying the 10% additional tax on early distributions;

• Cash in savings bonds for education costs without having to pay tax on the interest;

• Receive tax-free education benefits from your employer; and

• Claim a business deduction for work-related education.

Note: You generally can’t claim more than one of the benefits described in the list above for the same qualifying education expense.

Comparison table. Some of the features of these benefits are highlighted in the Appendix, later in this publication. This general comparison table may guide you in determining which benefits you may be eligible for and which chapters you may want to read.

When you figure your taxes, you may want to

TIP compare these tax benefits so you can choose

the method(s) that give(s) you the lowest tax liabil- ity. If you qualify, you may find that a combination of credit(s) and deduction(s) gives you the lowest tax.

Analyzing your tax withholding. After you estimate your education tax benefits for the year, you may be able to reduce the amount of your federal income tax withholding. Also, you may want to recheck your withholding during the year if your personal or financial situation changes. For more information, see Pub. 505.

Glossary. In this publication, wherever appropriate, we have tried to use the same or similar terminology when referring to the basic components of each education benefit. Some of the terms used are:

• Qualified education expenses,

• Eligible educational institution, and

• Modified adjusted gross income (MAGI).

Even though the same term, such as “qualified education expenses,” is used to label a basic component of many of the education benefits, the same expenses aren’t necessarily allowed for each benefit. For example, the cost of room and board is a qualified education expense for the QTP, but not for the education savings bond program.

Many of the terms used in the publication are defined in the glossary near the end of the publication. The glossary isn’t intended to be a substitute for reading the chapter on a particular education benefit, but it will give you an overview of how certain terms are used in discussing the different benefits.

Comments and suggestions. We welcome your comments about this publication and suggestions for future editions.

You can send us comments through IRS.gov/ FormComments . Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will

Publication 970 (2025) 3

consider your comments and suggestions as we revise our tax forms, instructions, and publications. Don’t send tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have a tax question not answered by this publication or the How To Get Tax Help section at the end of this publication, go to the IRS Interactive Tax Assistant page at IRS.gov/ Help/ITA where you can find topics by using the search feature or viewing the categories listed.

Getting tax forms, instructions, and publications. Go to IRS.gov/Forms to download current and prior-year forms, instructions, and publications.

Ordering tax forms, instructions, and publications. Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Don’t resubmit requests you’ve already sent us. You can get forms and publications faster online.

Useful Items You may want to see:

Publication

463

525

550

463 Travel, Gift, and Car Expenses

525 Taxable and Nontaxable Income

550 Investment Income and Expenses

590-A 590-A Contributions to Individual Retirement

Arrangements

590-B 590-B Distributions from Individual Retirement

Arrangements

Form (and Instructions)

1040

1040 U.S. Individual Income Tax Return

1040-NR

1040-SR

1040-NR U.S. Nonresident Alien Income Tax Return

1040-SR U.S. Income Tax Return for Seniors

2106

5329

8815

8863

2106 Employee Business Expenses

5329 Additional Taxes on Qualified Plans and Other Tax-Favored Accounts

8815 Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989

8863 Education Credits