Education Funding
beginner · $0 - $50K
For the first 4 years of college, get a credit of 100% of first $2,000 + 25% of next $2,000 in qualified expenses = $2,500 max. 40% ($1,000) is refundable.
Covers tuition, fees, books, supplies.
Annual Limit
$2,500 per eligible student per year
Tax Benefit
Up to $2,500 credit per year, $1,000 refundable
Requirements
- Enrolled at least half-time in degree program
- First 4 years of post-secondary education
- AGI under $90K single / $180K married
- No felony drug conviction
How to Implement
- 1Receive Form 1098-T from college
- 2Track qualified education expenses
- 3File Form 8863 with tax return
- 4Claim credit (one per student, max 4 years)
Frequently Asked Questions
Educational Only: This information is for educational purposes. Consult a qualified financial advisor or tax professional before implementing.
Last reviewed: April 2026
Related education funding strategies
529 Education Savings PlanTax-free growth for education expenses, plus state tax deductions in many states.Student Loan Interest DeductionDeduct up to $2,500 in student loan interest - even without itemizing.Lifetime Learning CreditTaking ANY courses to improve skills? Get up to $2,000 credit - no degree needed.
Sources
- Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
- Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
- Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.