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How VA education benefit payments affect your taxes

Learn about the IRS tax rules (called exclusions) for your VA education benefit payments, and find out how your payments affect your tax credits.

Do I have to pay taxes on the VA education benefit payments I receive?

No. Payments from all GI Bill programs are tax-free. This is true for you, your dependents, and your survivors. 

Tax-free education benefits include:

  • Tuition
  • Training fees
  • Test fees for licenses and certifications
  • Money to pay for a tutor
  • Work study
  • Books
  • Housing

Please don’t include education benefit payments as income when you file your taxes. 

Will VA education benefit payments affect my tax credits?

Yes. If the tax credits you want to claim are based on your education expenses, you’ll need to subtract your VA education benefit payments from your total education expenses. These are the payments that go directly to you—not to your college.

Example: Let’s say you get 2 VA education benefits:

  • $1,200 a month in a VA basic housing allowance that we deposit into your checking account
  • A $3,500 tuition payment that we pay directly to your college

Now let’s say you paid $5,000 in deductible education expenses. You can claim the $3,500 that we paid to your college. But you must subtract the $1,200 basic housing allowance that we paid you directly. So you can claim a total of $3,800 in education expenses.

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Related information

VA benefits

  • Education and training

    Apply for and manage your GI Bill and other education benefits to help pay for college and training programs.

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