If you paid qualified education expenses during 2026, you may be eligible for an education tax credit when you file your federal tax return in 2027. Education credits can lower your tax bill, and in some cases, increase your refund.
There are two education credits available:
- The American Opportunity Credit (AOC)
- The Lifetime Learning Credit (LLC)
You can claim only one education credit per student, per year. However, if you have multiple students, you may be able to claim different credits for different students. The same education expenses cannot be used to claim more than one tax credit or deduction. This is known as the IRS "no double benefit" rule. Education credits - AOTC and LLC | Internal Revenue Service
American Opportunity Credit (AOC)
The American Opportunity Credit is designed for students pursuing an undergraduate degree or another recognized educational credential. It generally offers a larger tax benefit than the Lifetime Learning Credit and may provide a refund even if you owe little or no tax.
Maximum Credit
You may qualify for a credit of up to $2,500 per eligible student. Tax credits and deductions for education - Internal Revenue Service
Refundable Portion
Up to 40% of the credit (up to $1,000) may be refundable. This means you could receive part of the credit as a refund even if you do not owe income tax. The remaining portion is nonrefundable and can only reduce your tax liability. Tax credits and deductions for education - Internal Revenue Service
Income Limits
Your eligibility is based on your Modified Adjusted Gross Income (MAGI). The IRS updates and publishes the applicable income limits in the instructions for Form 8863.
For tax year 2026, use the income limits provided in the current IRS Form 8863 instructions or let our software determine your eligibility automatically. Education credits - AOTC and LLC | Internal Revenue Service
Who Qualifies?
To claim the American Opportunity Credit, the student must meet all of the following requirements:
- Be enrolled in a program leading to a degree, certificate, or other recognized credential.
- Be enrolled at least half-time for at least one academic period during the year.
- Not have completed the first four years of post-secondary education before the beginning of the tax year.
- Not have claimed the credit for more than four tax years.
- Not have a felony conviction for possessing or distributing a controlled substance. Education credits - AOTC and LLC | Internal Revenue Service
Lifetime Learning Credit (LLC)
The Lifetime Learning Credit helps offset the cost of higher education, graduate school, professional development courses, and classes taken to improve job skills. It offers more flexibility than the American Opportunity Credit but provides a smaller maximum benefit.
Maximum Credit
You may qualify for a credit of up to $2,000 per tax return. Unlike the AOC, this limit applies to the entire return, not to each student. Tax credits and deductions for education - Internal Revenue Service
Refundable Portion
The Lifetime Learning Credit is nonrefundable. It can reduce the amount of tax you owe, but it cannot increase your refund or create a refund by itself. Education credits - AOTC and LLC | Internal Revenue Service
Income Limits
Eligibility for the Lifetime Learning Credit is also subject to IRS income limits based on MAGI.
For tax year 2026, refer to the current IRS Form 8863 instructions or allow our software to calculate eligibility for you during the filing process. Education credits - AOTC and LLC | Internal Revenue Service
Who Qualifies?
The Lifetime Learning Credit may be available if:
- The student attends an eligible educational institution.
- The student takes one or more courses during the year.
- The courses are part of a degree program or are taken to acquire or improve job skills. Education credits - AOTC and LLC | Internal Revenue Service
Unlike the AOC:
- The credit can be claimed for all years of post-secondary education.
- There is no limit on the number of years it may be claimed.
- The student does not need to pursue a degree or credential.
- Half-time enrollment is not required. Education credits - AOTC and LLC | Internal Revenue Service
Choosing the Right Education Credit
If a student qualifies for the American Opportunity Credit, it often provides the greater tax benefit because the maximum credit is higher and a portion may be refundable. However, the Lifetime Learning Credit may be the better option for graduate students, part-time students, individuals taking career-development courses, or anyone who does not meet the AOC requirements.
When you prepare your return, our software will help determine which education credit gives you the best tax benefit based on your eligibility and qualified education expenses.