Income Tax Benefit
On January 1, 2003, the new Resident Income Tax legislation came into effect. According to the new law (Article 21, part 1.4 and 2 and 4), amounts paid for studies (when higher education and/or qualification is obtained upon graduation, as well as doctoral studies and art post-graduate studies) by residents of Lithuania can be deducted from the taxable income and thus decrease the income tax for residents. If a person whose studies are being paid for is under 26 years of age and tuition cannot be deducted from his/her taxable income, the tuition can be deducted from the taxable income of one of his/her parents/foster parents. If a loan is taken to pay for studies, the amounts that can be deducted are the amounts repaid. The tuition is to be deducted in the annual income declaration.
The highest net benefit of this deduction is income tax savings amounting to 15% of tuition. For more information on Income tax benefit visit www.vmi.lt.