Executive MBA Tuition Deduction

Josh Nowack

March 5, 2015

As part of the MBA tuition deduction, which represents a good chunk of my tax practice, folks will ask whether or not they qualify.  This really hinges typically on one key point -- does the MBA qualify the student for a new trade or business.

It is a great question that is asked many times each year. In general, education is not deductible if it is part of the minimum skills required as part of a trade or business. It’s the reason why professional schools like law school, medical school, dental school, and architectural school are all not deductible. In order to enter into these professions, you need to go to school as part of the basic requirements.

For a career in business, a similar requirement just does not exist. You don’t need an MBA to go into business.

Where this bears relevance for an MBA student, however, is in your particular situation. If YOU require an MBA to advance at your current job (look at your boss’s job description). Or, if you require an MBA to change jobs. Even, if your offer letter makes even a casual reference to starting a job after graduation, that would be inflammatory.

For the same reason, in general, if you are changing career paths to something totally unrelated to what you were doing before business school, you would be ineligible to deduct. But if pursuing an MBA genuinely improves and/or maintains your ability to do the job you currently perform, you’re set. This is why deducting the MBA makes a ton of sense for executive MBA students such as yourself.


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