The Federal government and New York State offer tax credits for qualified undergraduate, graduate/professional and part-time 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 credits and deductions in the form of the Hope Scholarship Credit, the Lifetime Learning Credit and the Education Loan Interest Deduction.
Tax Credits/Deductions Quick Reference
Tax Credits and Deductions
New York State Tuition Tax Credit/DeductionThrough 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 (2009 and 2010 Tax Years)

Federal Hope Scholarship Credit		The new American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.
Federal Lifetime Learning Tax CreditThe Lifetime Learning Tax Credit provides a maximum tax credit of up to $2,000 for undergraduate, graduate/professional, or part-time postsecondary study.
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 ProgramNew 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. Federal tax benefits on 529 accounts are now permanent; assets grow tax deferred.
Education Savings BondsGenerally, 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 you income in the 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.