2027 education tax numbers: every IRS limit that moved, and two that did not
On 5 November 2026 the IRS published its inflation adjustments for 2027. Five figures that decide what education costs a family moved up; the two big education credits did not, because Congress never indexed them.
- Employer tuition: $5,400 tax-free in 2027, up from $5,250, the first rise since 1986 (details).
- Student loan interest: the $2,500 deduction now fades out from $90,000 to $105,000 single, $180,000 to $210,000 joint.
- 529 gifts: $20,000 per recipient per year without a gift tax return, or $100,000 spread over five years by election.
- Not moving: the American Opportunity and Lifetime Learning credits still fade out from $80,000 to $90,000 single.
- 2026
- 2027, moved with inflation
- Fixed in the statute, did not move
All seven figures, 2026 against 2027
| Item | 2026 | 2027 | Source |
|---|---|---|---|
| Employer education benefit (Section 127)Tax-free amount per employee | $5,250 | $5,400 | Rev. Proc. 2026-35 s3.17 |
| Student loan interest deduction (Section 221), singlePhase-out range for the $2,500 deduction | $85,000 to $100,000 | $90,000 to $105,000 | Rev. Proc. 2026-35 s3.31 |
| Student loan interest deduction, jointPhase-out range | $175,000 to $205,000 | $180,000 to $210,000 | Rev. Proc. 2026-35 s3.31 |
| Savings bonds for education (Section 135), singlePhase-out range for the interest exclusion | $101,800 to $116,800 | $105,100 to $120,100 | Rev. Proc. 2026-35 s3.19 |
| Savings bonds for education, jointPhase-out range | $152,650 to $182,650 | $157,600 to $187,600 | Rev. Proc. 2026-35 s3.19 |
| Gift tax annual exclusion (Section 2503)Per recipient, the usual ceiling for a 529 gift without a gift tax return | $19,000 | $20,000 | Rev. Proc. 2026-35 s3.46 |
| American Opportunity and Lifetime Learning credits (Section 25A)Phase-out range, single (joint $160,000 to $180,000) | $80,000 to $90,000 | $80,000 to $90,000 | 26 U.S.C. 25A, not indexed |
What the changes mean
The same income keeps more of the student loan interest deduction. In 2026 a single filer earning $100,000 had lost it entirely; in 2027 the same income sits two thirds of the way through the new $90,000 to $105,000 range, so part of the deduction survives.
Savings bonds cashed for tuition keep their tax-free interest at slightly higher incomes: the single range moves from $101,800 to $116,800 up to $105,100 to $120,100.
Grandparents funding a 529 can give $20,000 a year per grandchild without filing a gift tax return, $1,000 more than in 2026. Section 529 also lets a larger gift be treated as made over five years, which at the 2027 exclusion is $100,000 from one giver.
The credits are the trap. Because the $80,000 to $90,000 range for the American Opportunity and Lifetime Learning credits is fixed in the statute, every year of wage growth pushes more families out of it. A family at $85,000 that claimed half a credit this year can lose it with an ordinary raise.
Frequently asked questions
What is the student loan interest deduction income limit for 2027?
For 2027 the $2,500 deduction starts to phase out above $90,000 of modified adjusted gross income ($180,000 joint) and is gone at $105,000 ($210,000 joint), per IRS Rev. Proc. 2026-35 section 3.31. In 2026 the range is $85,000 to $100,000 ($175,000 to $205,000 joint).
How much can I give to a 529 plan in 2027 without filing a gift tax return?
The gift tax annual exclusion is $20,000 per recipient for 2027 (Rev. Proc. 2026-35 section 3.46), up from $19,000 in 2026. A 529 gift above that can be spread over five years by election, which puts the five-year figure at $100,000 per beneficiary for one giver.
Did the American Opportunity and Lifetime Learning credit limits change for 2027?
No. Their phase-out range, $80,000 to $90,000 single and $160,000 to $180,000 joint, is written into section 25A and is not adjusted for inflation.
What is the Section 127 employer tuition limit for 2027?
$5,400, up from $5,250, the first change since 1986. See our page on the 2027 Section 127 limit.
Sources, read 7 November 2026: IRS Rev. Proc. 2026-35 (2027: sections 3.17, 3.19, 3.31, 3.46); IRS Rev. Proc. 2025-32 (2026 figures); 26 U.S.C. 25A (education credits). Not tax advice.