How much of college tuition is tax deductible?

I've been trying to figure out if any part of college tuition is tax deductible, as this could impact my family's financial planning. I've heard there are education tax credits or deductions, but I'm not sure how they work exactly. Can someone explain how much of the tuition could potentially be deducted on taxes, and any specific requirements or benefits? It would be great to know what to expect or look for when thinking about paying for college.

The cost of tuition can indeed be tax deductible thanks to certain credits and deductions provided by the IRS.

The American Opportunity Tax Credit (AOTC) is one key credit available to undergraduate students enrolled at least half-time for at least one academic period during the tax year. This can cover up to $2,500 annually per eligible student. The credit is calculated as 100% of the first $2,000 of tuition and related expenses, and 25% of the next $2,000. And 40% of the credit is refundable.

The Lifetime Learning Credit (LLC) is another non-refundable credit that offers up to $2,000 per tax return for any level of higher education, including undergraduate, graduate, and professional degrees, or for job development courses. But here the threshold is different - it’s calculated as 20% of the first $10,000 of tuition and related expenses.

Do note that you cannot claim both these credits for the same student and same tax year.

There's also the Tuition and Fees Deduction that enables you to deduct up to $4,000 from your income for tuition, fees, and course materials. This could lower your taxable income level.

Each of these options has different income requirements and eligible expenses, and they may or may not be refundable. It would be wise to consult with a tax advisor or use tax software to ensure you're accurately claiming your eligible educational expenses and understanding the benefits associated with each credit or deduction.