NOTE: A version of this article was originally written and published by Matt Rowley on January 23, 2019. It was edited and updated by Jazmin Hill in April 2026. 

DISCLAIMER: This article is provided for informational purposes only and does not constitute tax advice. Individuals should consult a qualified tax professional regarding their specific situation. 

If you’re using GI Bill® benefits to help pay for college, you may be wondering how those funds affect your tax return.  

Is the GI Bill® taxable? Most GI Bill® education benefits are not considered taxable income, including benefits provided through the Post-9/11 GI Bill® and Montgomery GI Bill® programs. Here’s a quick summary of how GI Bill® benefits affect taxes: 

• GI Bill® tuition payments are not taxable. 
• Basic Allowance for Housing (BAH) is not taxable. 
• Out-of-pocket education costs may qualify for tax credits. 
• Many schools issue Form 1098-T, which helps determine eligibility for education tax credits. 

This article breaks down how GI Bill® benefits interact with taxes and what veterans should know when filing. While this is a general overview, it’s always best to consult a qualified tax professional or review guidance from the Internal Revenue Service (IRS) for advice related to your specific situation. 

GI Bill® Benefits and Taxes  

Many veterans ask whether GI Bill® benefits are taxable. The funds you receive via tuition assistance or under the GI Bill® – whether you used the Montgomery GI Bill®, the Post-9/11 GI Bill® or the Forever GI Bill® – are generally not taxable income. 

You do not need to claim education funds awarded from the military as taxable income. This applies both to the benefits paid directly to your school for tuition and the Basic Allowance for Housing (BAH) paid directly to you. If, for some reason, you claimed VA benefits as income in the past, it may not be too late to file an amended return and have your taxes for that year reduced, which may result in a refund. 

Another common question is “Do I receive a Form 1098-T if I use the GI Bill®?” Students who receive education benefits typically do receive Form 1098-T from their school. This form shows the amount billed for qualified tuition and related expenses during the tax year. Even though GI Bill® payments are not taxable, the information on your 1098-T can still be useful if you paid any education costs out of pocket and want to determine whether you qualify for certain education tax credits. 

Education Tax Credits You May Qualify For

If the GI Bill® does not cover all your education expenses, you may be eligible for federal education tax credits offered through the IRS. 

Two of the most common credits include: 

• American Opportunity Tax Credit 
• Lifetime Learning Credit 

Depending on where you are in your educational journey, you may qualify for one of these credits. 

The American Opportunity Tax Credit (AOTC) provides a credit of up to $2,500 per year for eligible students in their first four years of postsecondary education, provided they have not completed their education before the end of the tax year. You must be enrolled at least half-time in an academic period during the year and be working toward a degree or other recognized credential.

The Lifetime Learning Credit (LLC) offers a credit of up to $2,000 for qualified expenses. While the AOTC can only be used for up to four years, there is no time limit on the LLC, and there aren’t any enrollment restrictions. For this reason, the LLC is usually used by graduate students or those taking courses to finish a degree or attempting to further their careers by taking skills-building courses.

How the GI Bill® Affects These Credits 

If your GI Bill® benefits cover your entire tuition bill, you likely will not have remaining expenses to claim for an education tax credit. If you pay any portion of your educational expenses out of pocket, you may qualify for one of the federal educational tax credits. You will have to do some calculations, but you can potentially save on your taxes by doing so.  

To calculate the amount to apply toward the credit, deduct the amount the GI Bill paid toward your tuition from the total amount paid, and the remaining amount is your qualified expense for tax credit purposes. This doesn’t include the BAH, but only the amount paid directly to the school. Also, keep in mind that you must meet income guidelines to qualify for either credit. 

What Qualifies as an Expense? 

If you plan to take one of the tax credits, it’s important to understand what qualifies as an expense. Under the IRS rules, a qualified expense is books, course materials, equipment, required fees, supplies and tuition. As with any deduction, you will need documentation of what you spend, so save your receipts. You will also need documentation of your tuition bills and, in the case of the AOTC, a copy of your transcript from school. 

According to the IRS, qualified education expenses may include: 

• Books and course materials 
• Required enrollment fees 
• Required supplies or equipment 
• Tuition 

If you plan to claim a tax credit, keep records such as: 

• Enrollment documentation or transcripts if required 
• Receipts for books and supplies 
• Tuition statements 
• Your Form 1098-T 

Good recordkeeping can help ensure you receive any credits you qualify for. Again, this information is NOT meant to substitute for the advice of a qualified tax professional. Because the rules change regularly, check with your tax preparer or accountant to ensure that you are following the most up-to-date rules. 

Columbia Southern University Offers Military-Friendly Education 

Columbia Southern University supports active-duty military members, veterans and their families with flexible online programs designed to fit busy schedules. To learn more about how Columbia Southern University supports active-duty military members and veterans, visit ColumbiaSouthern.edu/Military. 

NOTE: A version of this article was originally written and published by Matt Rowley on January 23, 2019. It was edited and updated by Jazmin Hill in April 2026.