Back-to-School Tax Savings: 6 Tax Breaks Parents, Teachers, and Students Should Know

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As summer winds down and families gear up for the new school year, now is the perfect time to check if you’re missing out on valuable tax breaks tied to education and childcare expenses. Whether you’re a parent, a teacher, or a college student footing your own tuition bill, there may be savings you haven’t considered.

Here’s your Back-to-School Tax Guide, which features six tax breaks you may not have considered for this upcoming school year.

1. Educator Expense Deductions

This tax break is exclusively for teachers, aides, and school staff in grades K-12. For example, if you’re a teacher, you likely pay for classroom supplies out of your own pocket. The IRS recognizes this and allows you to deduct certain unreimbursed expenses, including:

• Books and classroom materials
• Cleaning Supplies
• Personal protective equipment
• Educational software and subscriptions
• Professional development courses

Tip: Keep your receipts organized — and remember, this deduction is available even if you don’t itemize your return.

Deductions can be up to $300 per educator – or $600 per couple if both spouses qualify for this deduction.

2. Child and Dependent Care Credit (CDCTC)

If your child is under 13 and you’re paying for care so you can work (or attend school), you may qualify for this credit. Eligible expenses include:

• Preschool and daycare
• Before and after school programs
• Summer day camps (not overnight)
• Babysitters and nannies (if paid legally)

This credit can be up to $3,000 for one child or up to $6,000 for two or more children. This credit can be worth 20-35% of your expenses, depending on your income.

It’s important to know, income limitations do apply, and this credit is non-refundable — meaning it can reduce your tax liability, but it won’t result in a refund if you don’t owe any tax.

3. American Opportunity Tax Credit (AOTC)

The AOTC is one of the most generous education credits available. This credit is available to parents or students in their first four years of college. It covers:

• Tuition and fees
• Required books and course materials
• Supplies and equipment

This credit can cover up to $2,500 per eligible student. The credit is also partially refundable, meaning you could get up to $1,000 back even if you don’t owe any tax.

However, income limits do apply. The credit begins to phase out at $80,000 for single filers and $160,000 for married couples filing jointly.

4. Lifetime Learning Credit (LLC)

Unlike the AOTC, the Lifetime Learning Credit has no limit on years claimed. You are eligible for this credit if you are a student of any age – this includes grad school or professional development. This credit is perfect for:

• Part-time students
• Graduate students
• Adults taking job-related or career-advancing courses

Expenses can include tuition, fees, books, and even some online programs.

However, this credit is not refundable, and its income limits are slightly lower than the AOTC.

5. 529 Savings Plan Contributions

A 529 plan is a tax-advantaged savings account specifically used for qualified education expenses. This tax deduction is for parents, grandparents, or anyone saving for education. A 529 plan helps because it offers:

• Tax-free growth
• Tax-free withdrawals for tuition, books, and other qualifying expenses (**see below for more information)
• Deductions or credits for contributions, even if you’re not the account beneficiary (depending on your state’s rules)

**Qualified tax-free withdrawals now also include:

• College Tuition
• K-12 tuition (up to 10,000 per year)
• Student loan repayments (up to $10,000 lifetime per beneficiary)
• Registered apprenticeship programs

6. Back-to-School Sales Tax Holidays

We have all have seen the back-to-school sales and savings commercials during this time of year. But beyond retail promotions, some states offer official sales tax holidays in July and August, waiving state sales tax on essentials like school supplies, clothing, computers, and accessories.

These tax holidays typically last a weekend, and the savings can add up — especially for families with multiple children. If you missed your state’s holiday this year, don’t worry — now’s a great time to mark your calendar and plan ahead for next year. Dates and eligible items vary by state, so be sure to check your state’s official website for details and deadlines.

Get a Head Start on Next Tax Season

With school back in session and schedules ramping up, now’s a smart time to start saving receipts for school-related expenses and tracking education payments in preparation for next year’s tax return. Make sure to also review your income and tax withholding status.

Planning ahead makes it easier to claim every deduction and credit you’re entitled to come tax season. Don’t miss out on these simple tax breaks you could very well be eligible for.

Need more help navigating these education tax breaks? At CMH Advisors, we’re here to guide you in the right direction financially. Whether you’re a parent, student, or educator, we’ll work with you to identify and apply the tax strategies that best fit your situation. Reach out to us at team@cpataxteam.com.