The two tests and the two exclusions
Publication 970 calls deductible courses qualifying work-related education. The course must pass at least one of two tests, and must not fall into either of two exclusions, whoever you are.
- Publication 970 adds that you can deduct qualifying education as a business expense even if it could lead to a degree.
- For employees, a change of duties involving the same general kind of work is not a new trade or business.
| Rule | What Publication 970 says | Online-course example |
|---|---|---|
| Test 1: required | Education your employer or the law requires to keep your present salary, status or job, serving a bona fide business purpose | A licensed professional's required continuing education course |
| Test 2: skills | Education that maintains or improves skills needed in your present work | A freelance web developer's course on a framework they already sell work in |
| Exclusion 1: minimum requirements | Not qualifying if it is needed to meet the minimum educational requirements of your present trade or business | Coursework needed to be allowed to do the job in the first place |
| Exclusion 2: new trade | Not qualifying if it is part of a program of study that will qualify you for a new trade or business, even if you do not plan to enter it | An accountant's coding bootcamp aimed at becoming a software engineer |
Self-employed: how the deduction works
Self-employed people claim qualifying education on Schedule C, or Schedule F for farming. Publication 970 says the expense comes directly off self-employment income, which reduces the amount subject to both income tax and self-employment tax.
Deductible items listed by Publication 970 and Topic 513 are tuition, books, supplies, lab fees and similar items, certain transportation and travel costs, and other education costs such as research. For an online learner that usually means the course or subscription fee and required books, supplies and software. Personal or capital expenses are not deductible, nor is the value of vacation time taken to study.
Topic 513 adds that education during a temporary absence from work, usually one year or less, can qualify if it maintains or improves skills and you return to the same general type of work.
Employees: why most cannot deduct courses now
Publication 970's reminder for this chapter is blunt: for tax years beginning after 2017, you no longer deduct work-related education expenses as a miscellaneous itemized deduction subject to the 2% of adjusted gross income floor. That was the route ordinary employees used.
The 2017 change was originally scheduled to end after 2025. Section 70110 of Public Law 119-21 struck the "before January 1, 2026" end date from section 67(g) of the tax code, so the suspension continues, with a new exception for educator expenses. In practice, an ordinary employee should not plan on deducting an online course.
Four groups can still deduct qualifying education as employees: Armed Forces reservists, qualified performing artists and fee-basis state or local government officials (as an adjustment to income, using Form 2106), and individuals with a disability claiming impairment-related education expenses (as an itemized deduction on Schedule A).
| Who you are | Can you deduct a qualifying course? | Where it goes |
|---|---|---|
| Self-employed or sole proprietor | Yes | Schedule C (or Schedule F) |
| Armed Forces reservist, qualified performing artist, fee-basis government official | Yes | Schedule 1, with Form 2106 |
| Individual with a disability, impairment-related expenses | Yes, if you itemize | Schedule A, with Form 2106 |
| Other employees | No business deduction | Look at employer reimbursement or the Lifetime Learning Credit instead |
The Lifetime Learning Credit instead of, or alongside, a deduction
For 2025, the Lifetime Learning Credit is 20% of the first $10,000 of qualified education expenses, up to $2,000, phased out between $80,000 and $90,000 of modified adjusted gross income ($160,000 to $180,000 on a joint return). It requires enrollment at an eligible educational institution, so many online course platforms do not qualify; check before counting on it.
Publication 970 does not allow a double benefit: you cannot deduct an expense as a business expense and also claim the Lifetime Learning Credit on the same expense. You can claim more than one benefit if you use different expenses for each.
Illustrative comparison: a sole proprietor pays $3,000 for a course at an eligible institution that improves skills in their current business. They can deduct the $3,000 on Schedule C, reducing income subject to income and self-employment tax, or, if their income is under the phase-out, claim a $600 credit (20% of $3,000), but not both on the same $3,000. Which is worth more depends on their tax rates, so run both with your tax software or preparer.
Employer reimbursement changes the answer
If your employer reimburses the course under an accountable plan, the reimbursement should not appear as wages on your Form W-2, and you have nothing left to deduct. Publication 970 also says that if you do not claim a reimbursement you are entitled to, you cannot deduct the expenses it would have covered.
Tax-free educational assistance, including employer-provided assistance and veterans' educational assistance, reduces the expenses you can deduct. Amounts paid with wages, loans, gifts, inheritances or personal savings do not.
Record-keeping checklist
Publication 970 says to keep records for 3 years from the date you file the return claiming the deduction, and that estimates or approximations do not count as proof.
- Receipts or card statements for each course, subscription, book and exam fee.
- The course description or syllabus, showing the subjects studied, and dates of enrollment.
- A short note on how the course maintains or improves skills in your current work, with an example of client work or a job duty it supports.
- For employees in a deductible group, a statement from the employer on whether the education was required and how much was reimbursed.
- Details of any scholarships, grants or tax-free assistance received for the same course.
- Which expenses you used for a deduction and which for a credit, so the same dollar is never counted twice.
Questions before you decide
Can I deduct an online course as a business expense?
If you are self-employed and the course maintains or improves skills needed in your current business, or is required to keep your status, you can generally deduct it on Schedule C. It must not meet the minimum requirements of your work or qualify you for a new trade or business.
Can employees deduct online courses?
Most cannot. Publication 970 says that for tax years beginning after 2017, work-related education is no longer a miscellaneous itemized deduction, and Public Law 119-21 removed the 2025 end date. Armed Forces reservists, qualified performing artists, fee-basis officials and individuals with impairment-related expenses are exceptions.
Can I take the Lifetime Learning Credit and a deduction for the same course?
Not on the same expenses. Publication 970 bars deducting an expense as a business expense and also using it for the Lifetime Learning Credit. You can claim both if different expenses support each one.
Sources & verification
Product details and prices can change. Check the linked provider before buying.
- IRS Publication 970 (2025), chapter 11: business deduction for work-related education Accessed 30 Oct 2026
- IRS Tax Topic 513: work-related education expenses Accessed 30 Oct 2026
- Public Law 119-21, section 70110: miscellaneous itemized deductions (GovInfo) Accessed 30 Oct 2026
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