The short answer
There are two main federal education credits. The American Opportunity Tax Credit (AOTC) is for the first four years of college or other postsecondary education toward a degree or credential — up to $2,500 per eligible student, partly refundable. The Lifetime Learning Credit (LLC) is broader — any number of years, including single courses and job-skills classes — but smaller: up to $2,000 per return, and nonrefundable.
Side by side
| American Opportunity Tax Credit | Lifetime Learning Credit | |
|---|---|---|
| Maximum credit | Up to $2,500 per eligible student | Up to $2,000 per return |
| How it is figured | 100% of the first $2,000 of qualified expenses plus 25% of the next $2,000 | 20% of up to $10,000 of qualified expenses |
| Refundable? | Up to 40% (up to $1,000) may be refundable, subject to eligibility rules | No — nonrefundable |
| Years available | Generally only the first four years of postsecondary education, and no more than four tax years per eligible student | No four-year limit |
| Program | Generally must be pursuing a degree or other recognized credential | One or more courses; can include courses to acquire or improve job skills |
| Enrollment | Generally at least half-time for at least one academic period | One or more courses |
| Books, supplies, equipment | Required course materials can qualify even if not bought from the school | Generally qualify only if required to be paid directly to the school as a condition of enrollment or attendance |
2025 income limits
For tax year 2025, both credits phase out based on your modified adjusted gross income (MAGI):
| Filing status | Credit is reduced when MAGI is | No credit when MAGI is |
|---|---|---|
| Single, head of household, or qualifying surviving spouse | $80,000 – $90,000 | $90,000 or more |
| Married filing jointly | $160,000 – $180,000 | $180,000 or more |
Within the phase-out range the credit is reduced, so being below the upper limit does not by itself mean you get the full credit. The Form 8863 instructions show the calculation.
Rules that apply to both credits
- One credit per student per year. You cannot claim both the AOTC and the Lifetime Learning Credit for the same student in the same tax year.
- No double benefit. The same expenses cannot be used for more than one tax benefit.
- Tax-free scholarships and grants can reduce the qualified expenses you count.
- Expenses that generally do not qualify include room and board, transportation, insurance, and ordinary personal living expenses.
- Married filing separately generally cannot claim these education credits.
- If someone else claims you as a dependent, you cannot claim the education credit on your own return.
New for 2026: Social Security number requirement
Publication 970 (2025) says that beginning in 2026, anyone claiming the AOTC or the Lifetime Learning Credit must have a Social Security number (SSN) that is valid for work and that was issued before the due date of the return. If the person claiming the credit is not the student, the student also needs a valid SSN. This applies starting with 2026 returns; the 2025 rules in this guide are unchanged.
Examples (illustrative)
AOTC. Rina is a second-year university student enrolled full-time in a degree program. Her family pays $4,000 of qualified expenses in 2025. If all the requirements are met and their income is below the phase-out range, the AOTC is 100% of the first $2,000 plus 25% of the next $2,000 — $2,500 — and up to $1,000 of it may be refundable.
Lifetime Learning Credit. Ken works full-time and takes two evening courses to improve his job skills, paying $5,000 of qualified expenses. He is not pursuing a degree, so the AOTC does not fit, but the Lifetime Learning Credit may: 20% of $5,000 is $1,000, nonrefundable, if he meets the requirements and income limits.
Both are credits, which reduce your tax directly. "Refundable" means part of the AOTC can be paid to you even if it is more than your tax. See Tax credit vs. tax deduction.
How to claim
The credits are claimed on Form 8863, Education Credits, filed with your return. Form 1098-T, the tuition statement from the school, is generally relevant and required to claim the credits, subject to IRS exceptions. Publication 970 explains the full eligibility rules.