Is the GI Bill Taxable?
Is the GI Bill benefit, including the Post 9/11 GI Bill housing stipend, taxable? It’s an important question, especially if you need to claim tax credits for higher education.
Many VA benefits are not taxable, but you may need to adjust your federal education expenses at tax time.
As we’ll explore below, those adjustments are necessary to reflect your costs for tax credit purposes accurately. What follows is not tax advice. Consider this a reference for discussing these benefits with an IRS representative or a trained tax professional.
Did You Know?
There are free resources in tax season you can use if you need help with tax issues such as these. One such resource is MilTax, which offers free tax prep software and support for qualifying service members and family members.
According to the official site, MilTax provides “one-on-one help from MilTax experts: tax pros with special training in military-specific tax situations.”
Read more: Free Tax Support for Military Members
Internal Revenue Service Rules: GI Bill Benefits and Federal Taxes
According to the Department of Veterans Affairs, the payments you get from “all GI Bill programs” are exempt from federal taxes.
The benefits are not taxed if you receive GI Bill benefits as an active duty service member, a spouse, a dependent, or a qualifying Reserve component member.
VA Tax-Free Education Benefits
When you apply for and use VA education benefits like the GI Bill, you get tax-free payments in the following areas:
- Tuition
- Housing stipend
- Fees
- Test fees for licenses and certifications
- Tutoring
- Work-study
- Books
These benefits aren’t limited to the one type of VA education benefit program; you may receive some or all of the above tax-free when applying for:
- Edith Nourse Rogers STEM Scholarships
- VET TEC Training
- Yellow Ribbon Program
- Fry Scholarship
- National Call To Service Program
- Survivors’ and Dependents’ Educational Assistance (DEA) program
Read more: Veteran Education Benefits Guide
Do VA Education Benefits Affect Federal Income Tax Credits?
VA.gov says if the federal income tax credits you claim “are based on your education expenses, you’ll need to subtract your VA education benefit payments from your total education expenses.” The VA is referencing payments that “go directly to you—not to your college”
For example, if you get a Post 9/11 GI Bill housing stipend, you would subtract that amount from your deductible education expenses because it was paid directly to you.
The amount the VA pays to the school is the amount you may claim as deductible expenses.
Learn More About IRS federal income tax rules governing VA benefits and how receiving them may affect your federal tax credits.
What to Know About Federal Income Taxes and GI Bill Benefits
What’s discussed above is current at press time, but income tax laws change frequently, and you will need to reference IRS literature from the current tax year to learn what’s permitted in the current tax season and what is not.
When in doubt, always consult a trained professional or an IRS representative.
RELATED:
- Military Tax Resources and Services
- Tax-Free Military Retirement Pay In These States
- Veteran Tax Benefits
- Federal Tax Benefits for Disabled Veterans
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
