Do Nurses Get Tax Refunds? Credits, Deductions, and Stipends

Yes, nurses do get tax refunds. Like any other W-2 employee, a staff nurse receives a federal refund whenever the tax withheld from paychecks during the year exceeds what is actually owed at filing time. How large that refund turns out to be depends on the nurse’s withholding, the credits they qualify for, and whether they work as a hospital employee, a travel nurse, or a 1099 contractor.

Why Nurses End Up With Refunds

Every W-2 nurse fills out Form W-4, which tells the employer how much federal income tax to take out of each paycheck.¹ Those withheld amounts are estimates. Payroll software cannot know in advance which credits you will claim, whether you will have a child, or how many overtime shifts you will pick up. When your total withholding for the year comes in higher than your actual tax bill, the IRS returns the difference. When it comes in lower, you owe.²

Nurses are especially prone to overwithholding for one specific reason: variable shifts and overtime. Payroll systems tend to annualize each paycheck, projecting its earnings across the full year. A stretch of high-overtime weeks can push the projected annual income up and trigger a heavier withholding rate than your real annual income warrants. When that happens, the extra tax comes back as a refund.

Credits That Increase a Nurse’s Refund

Credits reduce tax dollar for dollar, which makes them more valuable than deductions of the same size. A deduction lowers taxable income; a credit comes off the tax you owe.³ Three credits show up most often on a nurse’s return.

Lifetime Learning Credit

If you are paying for continuing education, an advanced certification, or a graduate degree, the Lifetime Learning Credit covers 20 percent of the first $10,000 in qualified tuition and fees, up to $2,000 per return.⁴ Nurses moving from an associate to a bachelor’s degree, or pursuing a nurse practitioner program, claim it by attaching Form 8863 to their return.⁵ There is no cap on how many years you can take it. It is nonrefundable, though, so it can bring your tax to zero but cannot generate a refund by itself. For tax year 2026, the credit phases out between $80,000 and $90,000 in modified adjusted gross income for single filers, and between $160,000 and $180,000 for joint filers.⁶

Child Tax Credit

Nurses with children under 17 can claim up to $2,200 per qualifying child for the 2025 tax year. If your federal income tax is low, the refundable Additional Child Tax Credit can still pay out up to $1,700 per child as long as you have at least $2,500 in earned income.⁷ Because the refundable portion pays out even when your tax bill hits zero, it is one of the most common reasons a nurse’s refund exceeds what they paid in.

Earned Income Tax Credit

The Earned Income Tax Credit is refundable and aimed at low- to moderate-income workers. You can qualify with or without children, though the amount rises sharply with each qualifying child.⁸ For 2025, the AGI ceiling runs from $19,104 for a single filer with no children to $68,675 for a married couple filing jointly with three or more children.⁹ Newer nurses, part-time nurses, and those returning to the workforce are the most likely to land inside these ranges.

Student Loan Interest

Many nurses finish school with debt from their nursing program. You can deduct up to $2,500 in student loan interest paid during the year without having to itemize; the deduction comes off your adjusted gross income directly.¹⁰ For 2025, the deduction phases out between $85,000 and $100,000 in modified AGI for single filers, and between $170,000 and $200,000 for joint filers.¹¹ Those thresholds are adjusted annually, so check current IRS guidance when filing.

What Nurses Can No Longer Deduct

Before 2018, W-2 nurses could itemize unreimbursed job expenses like scrubs, stethoscopes, continuing education fees, and union dues on Schedule A. The Tax Cuts and Jobs Act eliminated that deduction, and the One, Big, Beautiful Bill Act signed in 2025 made the elimination permanent.⁶ Staff nurses cannot deduct the cost of uniforms, professional tools, or licensing fees on their federal returns.

For 2026, the standard deduction is $16,100 for single filers and $32,200 for joint filers.⁶ With work expenses off the table, the standard deduction is the right choice for nearly every staff nurse.

The one way W-2 nurses can still capture work-related costs is through an employer’s accountable plan. Under IRS rules, reimbursements paid through such a plan are tax-free as long as you substantiate the expense and return anything paid in excess of what you spent. Those reimbursements never appear in Box 1 of your W-2.¹² If your employer does not offer this, you pay for those items with after-tax dollars and get no federal benefit.

Travel Nurses and Tax-Free Stipends

Travel nurses usually take home a package split between taxable hourly wages and non-taxable stipends for housing, meals, and incidentals. Those stipends stay tax-free only if you keep a permanent tax home, meaning a residence where you pay rent or a mortgage and cover regular living expenses, separate from your assignment location.¹² Your tax home is generally the area of your main place of work, not necessarily where your family lives.

The one-year rule is the key threshold. An assignment expected to last a year or less is temporary, and the stipends stay tax-free. Once an assignment is expected to run longer than a year, the IRS treats the assignment site as your new tax home, and the stipends become taxable.¹² A travel nurse who gives up a permanent residence loses the tax home entirely and may owe tax on every dollar of stipend received during that stretch.

Travel nurses who work across state lines often have to file a return in each state where they earned income. Some states have reciprocity agreements; many do not. Without an agreement, you generally file in both the work state and the home state and claim a credit on your home state return for what you paid the work state. A few states have no income tax, which sidesteps the issue for assignments in those places.

1099 Nurses Play by Different Rules

Nurses who work as independent contractors, common in per-diem staffing and private-duty care, receive a 1099-NEC rather than a W-2. No taxes are withheld from those payments, so the refund question changes character: whether you get one depends on whether your quarterly estimated payments overshot your final bill.

Self-Employment Tax

Contractor nurses owe self-employment tax of 15.3 percent on net earnings, covering both the employer and employee shares of Social Security and Medicare. For 2026, the Social Security portion applies to the first $184,500 in net self-employment income; the Medicare portion has no cap.¹³ Half of that self-employment tax is deductible as an adjustment to income, which lowers AGI.

Business Expenses on Schedule C

Self-employed nurses report income and expenses on Schedule C, and legitimate business costs reduce taxable income directly. Common categories include:

Equipment and supplies such as stethoscopes, blood pressure cuffs, and scrubs.¹⁴
Malpractice and professional liability premiums.¹⁴
Continuing education, certifications, and licensing fees.
Health, dental, and vision insurance premiums, deductible as an adjustment to income when you have a net profit and were not eligible for an employer plan during the same months.

Quarterly Payments

Because no employer withholds, contractor nurses have to pay estimated tax four times a year: April 15, June 15, September 15, and January 15 of the following year.¹⁵ Underpay across those four dates and you face an interest-based penalty on the shortfall.

Keeping the Refund Predictable

The single most useful habit for a W-2 nurse is reviewing the W-4 after any change that shifts your tax picture: a marriage, a new child, a promotion, a switch from part-time to full-time, or a stretch of heavy overtime.¹ For contractor nurses, running a mid-year projection and adjusting the next quarterly payment keeps the final bill in line with what you have already paid. Either way, the refund is not luck. It is the gap between what your payroll or your quarterly checks assumed and what your credits, deductions, and actual income produce at filing time.

1
Internal Revenue Service. About Form W-4, Employee’s Withholding Certificate
2
Internal Revenue Service. Form W-4, Employee’s Withholding Certificate
3
Internal Revenue Service. Credits and Deductions
4
Internal Revenue Service. Lifetime Learning Credit – LLC
5
Internal Revenue Service. About Form 8863, Education Credits
6
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
7
Internal Revenue Service. Child Tax Credit
8
Internal Revenue Service. Who Qualifies for the Earned Income Tax Credit (EITC)
9
Internal Revenue Service. Publication 596 (2025), Earned Income Credit (EIC)
10
Internal Revenue Service. Topic No. 456, Student Loan Interest Deduction
11
Internal Revenue Service. Publication 970, Tax Benefits for Education
12
Internal Revenue Service. Publication 463 (2024), Travel, Gift, and Car Expenses
13
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
14
Internal Revenue Service. Instructions for Schedule C (2024)
15
Internal Revenue Service. Estimated Tax