In the past 20 years, the cost of attending college has tripled and increased almost 8 times faster than wages. While public higher education is mostly a state responsibility, the federal government does incentivize continuing education through tax deductions and tax credits.

To understand how you might take advantage of these tax deductions as a college student or recent graduate, we’ve gathered 7 tax deductions and credits you should know to save the most money on your tax bill this year.

What is a Tax Deduction vs. a Tax Credit?

Tax deductions work to reduce your taxable income. For example, if you earn $50,000 in adjusted gross income as a single filer and claim a tax deduction worth $1,000, your net taxable income becomes $49,000. With this income, you fall into the 22% income tax bracket, saving you $220 in taxes, all things equal.

Tax credits work to reduce your tax liability dollar-for-dollar. For example, take the same situation as above. If you have $50,000 in adjusted gross income, you fall in the 22% tax bracket and pay $6,790 in federal income taxes. A $1,000 tax credit reduces this dollar-for-dollar, meaning you now only owe $5,790. You can see why tax credits are more valuable than tax deductions as a result.

1. Retirement Account Contributions (IRA)

It might seem odd to start with retirement when you’re just starting on your career journey or only have a weekend job, but this is a valuable tax deduction for students in the long-run. Before picking a stock trading app to invest this money, make sure you do your stock market research first.

Regardless of how you choose to invest, the tax code awards this behavior by offering you the ability to deduct your contributions from your taxable income if you make them into a traditional IRA. You can contribute $6,000 per year or your earned income, whichever is greater. Start saving for retirement early so you can benefit from compound growth.

2. Capital Gain Losses

If you trade stocks in a taxable account, you hopefully only make gains. But, we live in a realistic world. Not all of our investments will turn out to be winners. Depending on your state of residence, you may be able to start investing before the age of 21.

When you choose to sell your losing positions, you can harvest these tax losses to lower your taxable income. Each year, you can offset your capital gains with capital losses and claim up to $3,000 in losses against your earned income. Any unused capital losses roll forward indefinitely until you’ve completely offset capital gains in future years or you have used up your annual $3,000 maximum deduction against earned income.

3. American Opportunity Tax Credit

If you pay your own way for college, including tuition, fees, and other qualified higher education expenses, you may have the ability to claim the American Opportunity tax credit (AOTC) to lower your tax bill dollar-for-dollar.

This credit can be worth up to $2,500 per year for four years of schooling after high school if enrolled at least half-time and working towards a degree. To claim the full credit, you can claim the first $2,000 of qualified expenses and then up to 25% of the next $2,000, or $500, totaling $2,500.

4. Lifetime Learning Credit

Closely related to the American Opportunity tax credit, this one also lowers your tax bill on a dollar-for-dollar basis, but only one can be claimed. The Lifetime Learning Credit can help pay for undergraduate, graduate, or professional degree courses.

This credit does not carry a minimum enrollment amount (meaning you don’t need to be enrolled at least half time), and you don’t need to work towards a degree. Down the road, if you choose to return to school to earn additional credentials or need to take continuing education coursework to maintain licenses, you can apply the Lifetime Learning Credit to your tax bill.

5. Recovery Rebate Tax Credit

As part of the CARES Act, many Americans received a stimulus check or two. If you aren’t claimed as a dependent on someone’s tax return in 2020, and you didn’t receive a check, you could claim the Recovery Rebate Tax Credit on your return. People received these payments last year as an advance payment, but technically it counts as a tax credit on your 2020 return.

6. Student Loan Interest Deduction

If you’re one of 42 million Americans with outstanding student loans, you can deduct the interest paid as part of your student loan payments. To qualify for this deduction, you need to have paid at least $600 in student loan interest during the year and may deduct up to a maximum of $2,500 each year. Like most deductions and credits listed here, you will need to meet certain income limitations to claim this deduction.

7. Earned Income Tax Credit

If you attend college as an older student and earn a low-to-moderate income, you may also qualify for the earned income tax credit. The refundable nature of the credit means even if your tax bill falls below $0 (meaning you are due a tax refund), you can claim whatever negative balance the earned income tax credit produces.

For example, if you owed $2,000 in taxes before claiming the earned income tax credit but it amounts to $2,500 in value, this will lead to a negative tax bill of $500, which can then be returned to you via a tax refund.

This article originally appeared on Your Money Geek and has been republished with permission.