11 Education Tax Credits and Deductions Available

9. Interest Exclusion on U.S. Series EE and I Bonds Used for Education

If you redeem U.S. Series EE or Series I savings bonds to pay qualified higher education expenses, you may be able to exclude some or all of the interest from income—subject to income limits and other rules. This tax break applies when the bond owner names a qualified student, uses proceeds for tuition and related expenses at an eligible institution, and meets income-phase-out restrictions for the year of redemption. The interest exclusion may interact with claims for education credits, so coordinate benefits carefully. Example: Parents redeeming I bonds to cover a college bill could exclude the interest they earned if they meet IRS income tests and reporting rules. Interest reporting and form guidance (such as Form 1099‑INT from the Treasury) should be checked each year on IRS.gov.