Distribution of Education Tax Credits by AGI, 2010
Because the AOTC is partially refundable, 24% of the savings from tax credits went to households with AGI below $25,000 in 2010. Only 3% of the tax deduction benefit went to households in this income category.
Figure 16B: Distribution of Education Tax Credits by Adjusted Gross Income (AGI), 2010 (and Average Tax Savings per Recipient in 2011 Dollars)
Notes & Sources
NOTE: Refundable tax credits claimed on all returns are included. For nonrefundable credits and for deductions, only amounts claimed on taxable income tax returns are included. The value of tax deductions is estimated based on applicable marginal tax rates. Available data do not allow separation of independent students from parents of dependent students claiming tax credits and deductions. Percentages may not sum to 100 because of rounding.
SOURCES: Internal Revenue Service, Statistics of Income, Tables 1.3, 1.4, 3.3 (2010); calculations by the authors.
- Education tax credits and deductions are “tax expenditures.” They reduce federal income tax liabilities — and federal tax revenues. Their impact on the federal budget is the same as the impact of direct expenditures.
- The AOTC is available to taxpayers with an AGI as high as $180,000. Of the savings from tax credits, 23% went to households with an AGI of $100,000 or higher in 2010; 60% of the tuition tax deduction benefit went to households with incomes between $100,000 and $160,000.