Margin notes
- The AOTC is worth up to $2,500 per eligible student: 100% of the first $2,000 of qualified expenses and 25% of the next $2,000.
- The Lifetime Learning Credit is 20% of the first $10,000 of qualified expenses for all students on the return.
- You can claim only one of the two credits per student in a year, the IRS says.
College tuition is one of the largest bills a family pays, and the tax code offers two credits to soften it. Because they are credits, not deductions, they reduce tax dollar for dollar. The rules are specific, though, and families regularly claim the wrong one or miss both.
The two credits side by side
| American Opportunity (AOTC) | Lifetime Learning (LLC) | |
|---|---|---|
| Maximum credit | $2,500 per eligible student | $2,000 per return (20% of first $10,000) |
| How it is figured | 100% of first $2,000 + 25% of next $2,000 | 20% of up to $10,000 of expenses for all students |
| Refundable? | Partly: 40% | No |
| Years available | Only 4 years per student, before the first 4 years of college are completed | Unlimited |
| Enrollment | At least half-time, in a program leading to a degree or credential | One or more courses; no degree needed; job-skills courses count |
| Books and materials | Count, even if not bought from the school | Count only if they must be paid to the school |
| Drug felony | Student must not have a felony drug conviction | No such rule |
All figures and rules come from the IRS comparison chart for the two credits. The $2,000 LLC maximum is 20% of $10,000; the $2,500 AOTC maximum is $2,000 plus 25% of $2,000.
Income limits
The IRS comparison chart says your modified adjusted gross income must be less than $90,000, or $180,000 if married filing jointly, for either credit. The IRS release on 2026 adjustments notes that the Lifetime Learning Credit phases out between $80,000 and $90,000 of modified adjusted gross income ($160,000 to $180,000 for joint returns), and that these amounts have not been adjusted for inflation since 2020.
One credit per student
You can claim only one of the credits for each qualifying student in a year. You can claim both on the same return only if they are for different students and different expenses; the IRS says no double benefit is allowed. A family with one student in the third year of a degree and a parent taking a night course could claim the AOTC for the student and the LLC for the parent.
Tip: For a degree student in the first four years, the AOTC is usually worth more: its maximum is higher and 40% of it is refundable, so it can produce a refund even if you owe no tax. The LLC fits graduate school, part-time study and job training.
Who is the student, and who pays
The student can be you, your spouse if filing jointly, or a dependent you claim. Expenses count if they are paid by you, your spouse, your dependent or a third party; the IRS treats expenses paid by someone else for a student you claim as paid by you. Tuition and enrollment fees qualify for both credits.
New for 2026: Social Security number rule
The IRS notes that beginning in 2026, new Social Security number requirements apply. To claim the AOTC or LLC, you, your spouse if filing jointly, and the student if they are your dependent must have a Social Security number valid for work and issued before the due date of the 2026 return, including extensions.
Claiming the credits
Both credits are claimed on Form 8863. For the AOTC, you must include the school’s employer identification number on the form; for the LLC it is not required. In both cases the student must be enrolled at an eligible educational institution.
Related breaks
529 plans
A 529 plan is a savings account for education. The IRS explains that the benefit is the tax-free withdrawal of earnings that build up in the plan when used for qualified education expenses. Since 2018, qualified expenses also include up to $10,000 a year of tuition at an elementary or secondary public, private or religious school. Money moved to another 529 plan for the same beneficiary or a family member is not taxable. Check current IRS guidance, as the rules have changed several times.
Student loan interest
Interest on qualified student loans is deductible as an adjustment to income, so you do not need to itemize. IRS Publication 970 says the deduction is generally the smaller of $2,500 or the interest you actually paid during the year, and it is reduced at higher incomes.
Common mistakes
- Claiming the AOTC for a fifth year. It is available only for four tax years per eligible student.
- Claiming both credits for the same student in the same year. The IRS allows only one per student.
- Counting expenses that do not qualify. Tuition and enrollment fees qualify for both credits; course materials count for the LLC only when they must be paid to the school.
- Missing the income limit. Above $90,000 of modified AGI ($180,000 joint), neither credit is available.
Education credits stack with other family benefits in Tax Credits for Families in 2026: Child, EITC, Child Care and More. For why a credit beats a deduction of the same size, see Tax Deductions vs Tax Credits: Why a Credit Is Usually Worth More. Publication 970 has the full rules, and a tax professional can help coordinate credits with 529 withdrawals.