For tax year 2025, the American Opportunity Tax Credit (AOTC) can provide up to $2,500 per eligible student, while the Lifetime Learning Credit (LLC) provides up to $2,000 per tax return. The AOTC is generally for an undergraduate student in the first four years of postsecondary education who meets degree-program and half-time enrollment tests; the LLC can cover undergraduate, graduate, and job-skills courses without a four-year limit. Both have the same 2025 income phaseout ranges. This comparison covers 2025 returns; do not assume these dollar rules apply to later tax years.
How AOTC differs from LLC for tax year 2025
The largest practical differences are how each credit is capped, which students and courses qualify, and whether unused credit can be refunded. The IRS says that when the same student’s adjusted qualified expenses could be used for either credit, the AOTC will always be greater than the LLC. That comparison does not override eligibility rules or expense-allocation requirements.
| Decision point | American Opportunity Tax Credit (AOTC) | Lifetime Learning Credit (LLC) |
|---|---|---|
| Maximum before income phaseout | Up to $2,500 per eligible student | Up to $2,000 per tax return, shared across eligible students |
| Calculation | 100% of the first $2,000 and 25% of the next $2,000 in adjusted qualified expenses for each eligible student | 20% of up to $10,000 in adjusted qualified expenses total for all eligible students on the return |
| Refundability | Up to 40% may be refundable, generally as much as $1,000; special rules can limit the refundable portion for some younger students | Nonrefundable; it can reduce tax otherwise owed but does not produce a refund beyond that amount |
| Student and course rules | Generally, the student must not have completed the first four years of postsecondary education, must pursue a degree or other recognized credential, and must be enrolled at least half-time for at least one academic period | One or more courses at an eligible institution; no degree-program requirement. Courses to acquire or improve job skills may qualify |
| Use limit | Up to four tax years per eligible student | No four-year limit on the number of tax years |
| 2025 MAGI phaseout | $80,000–$90,000 for most filing statuses; $160,000–$180,000 for married taxpayers filing jointly | Same ranges as the AOTC |
| Expenses | Tuition, required fees, and qualifying course materials, including books, supplies, and equipment needed for a course even if not purchased from the institution | Tuition and required fees; books, supplies, and equipment generally count only when they must be paid to the institution as a condition of enrollment or attendance |
| Claiming form | Form 8863; the institution’s EIN is required | Form 8863; the form does not require the institution’s EIN for this credit |
These are IRS rules for tax year 2025, from the 2025 Instructions for Form 8863 and Publication 970 (2025). The credit you can claim depends on your return-specific facts and expense adjustments.
Who may qualify for the AOTC?
Start with the student’s education history and enrollment rather than the tuition total. For the AOTC, generally verify all of the following:
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- The student has not completed the first four years of postsecondary education before the beginning of the tax year.
- The student has not already used the AOTC for four tax years.
- The student is pursuing a degree or another recognized educational credential.
- The student is enrolled at least half-time for at least one academic period beginning in the tax year.
Additional eligibility rules and exceptions apply; consult the full Form 8863 instructions for the return year. The maximum is calculated separately for each eligible student, but the amount can be reduced by the income phaseout and adjusted expenses.
Who may qualify for the LLC?
The LLC may fit when a student takes eligible courses at an eligible educational institution but does not meet the AOTC’s first-four-years, credential, or half-time tests. It can apply to undergraduate or graduate study and to courses that acquire or improve job skills. Unlike the AOTC, it has no limit of four tax years.
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Its $2,000 maximum is per return, not per student. A household with several students does not multiply the LLC cap by the number of students; qualified expenses for all eligible students contribute to the same return-level calculation.
How the 2025 income phaseout works
For each credit, the 2025 modified adjusted gross income (MAGI) phaseout range is $80,000 to $90,000 for most filing statuses and $160,000 to $180,000 for married filing jointly. The credit is reduced through the applicable range and is unavailable at or above its upper limit. Married taxpayers filing separately are among the filing situations that cannot claim these credits. The IRS also lists other disqualifications, including being claimed as another taxpayer’s dependent and certain nonresident-alien circumstances; check the instructions against your filing facts.
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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →Clear out junk files and repair common Windows errorsFree Scan →The ranges above apply to 2025 returns. The IRS issued Publication 970 (2025) on February 11, 2026, and the 2025 Form 8863 instructions on November 6, 2025, according to the IRS Publication 970 page. Check the materials for the tax year being filed rather than carrying these amounts forward.
Which education expenses count?
Both credits use adjusted qualified expenses, not simply the tuition figure on a bill or Form 1098-T. The types of eligible costs differ, especially for course materials.
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AOTC expenses
Qualified expenses can include tuition, required fees, and course materials such as books, supplies, and equipment needed for a course, even when purchased from a seller other than the school.
LLC expenses
Qualified expenses can include tuition and required fees. Books, supplies, and equipment generally qualify only if the student must pay the institution for them as a condition of enrollment or attendance.
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Adjust expenses before calculating
Tax-free educational assistance and other education benefits may require an adjustment to expenses. Reconcile payment records with Form 1098-T: the amount shown on that form may not equal the qualified expenses actually paid. Follow the applicable IRS instructions and Publication 970 rather than treating gross tuition as the credit base.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Can you claim both credits?
A taxpayer may claim the AOTC for one student and the LLC for a different student on the same return, if each student and the expenses meet the rules. You cannot claim both credits for the same student in the same tax year, and you cannot use the same expense for multiple tax benefits. When both credits might fit a student’s adjusted expenses, compare eligibility, the AOTC’s refundable portion, other education benefits, and expense allocation rather than choosing on the headline maximum alone.
How to claim an education credit on a 2025 return
- Confirm who claims the student. Determine whether you, your spouse, or another taxpayer claims the student as a dependent; dependency and other filing facts can affect who may claim a credit.
- Check the student’s credit eligibility. Apply the AOTC’s four-year, prior-use, credential, and half-time rules, or determine whether the student’s courses qualify for the LLC.
- Reconcile expenses and assistance. Review tuition and payment records, Form 1098-T, required fees, eligible course materials, and tax-free education assistance. Do not count an expense toward more than one tax benefit.
- Apply the income and filing-status rules. Check the 2025 MAGI phaseout and the IRS’s other disqualifications using the 2025 Form 8863 instructions.
- Complete Form 8863 with the federal return. Enter the educational institution’s EIN when claiming the AOTC; the instructions do not require it for the LLC. Form 1098-T is generally required, with exceptions when an institution is not required to furnish one. Review the instructions for any applicable exception and documentation.
What changes for tax year 2026?
A later-year identification rule should not be applied to a 2025 return. An Internal Revenue Bulletin published in 2026 describes an AOTC requirement for taxable years beginning after December 31, 2025: the taxpayer must include their Social Security number and, when expenses were paid for a student other than the taxpayer or spouse, that student’s Social Security number. The Bulletin describes the number as work-eligible and required to be issued before the return due date. See the 2026 Internal Revenue Bulletin and verify the rules for the year you file.
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