26 U.S.C. § 25A
§ 25A. American Opportunity and Lifetime Learning credits
Explainer
Education credits: American Opportunity and Lifetime Learning
Up to $2,500 a year per student for the first four years of college ($1,000 of it refundable), or up to $2,000 per return for any study. Both phase out between $80,000 and $90,000 of income ($160,000–$180,000 joint).
In plain English
Section 25A gives two credits for paying tuition. You pick one per student per year.
American Opportunity (AOTC). 100% of the first $2,000 of qualified costs plus 25% of the next $2,000, for a maximum of $2,500 per student. It's for the first four years of college, and the student must be enrolled at least half-time. Up to 40% ($1,000) is , so it can be paid out even if you owe no tax.
Lifetime Learning Credit (LLC). 20% of up to $10,000 of costs, for a maximum of $2,000 per return, not per student. It covers any level of study, including graduate school and single courses taken to improve job skills, with no limit on years. It isn't refundable.
Who it touches
Students and the parents who claim them as dependents, adults going back to school, and graduate students. Colleges report payments on Form 1098-T.
The rules
| American Opportunity | Lifetime Learning | |
|---|---|---|
| Maximum | $2,500 per student | $2,000 per return |
| Refundable | up to $1,000 | no |
| Years | first 4 years of college | unlimited |
| (single) | $80,000 – $90,000 | $80,000 – $90,000 |
| Phase-out (joint) | $160,000 – $180,000 | $160,000 – $180,000 |
| ID required | for the taxpayer and the student, plus the school's | SSN from 2026 (any taxpayer ID for 2025) |
Qualified costs are tuition, required fees, and (for the AOTC) required books and supplies. Housing, transportation and insurance don't count.
Worked example
Dana and Leo file jointly with $120,000 of income. Their daughter is a sophomore and they paid $6,000 of tuition after scholarships.
- AOTC: 100% of $2,000 + 25% of the next $2,000 = $2,500
- Their income is below the $160,000 phase-out, so they get the full credit
- If they owed only $1,500 of tax, the credit would wipe that out and $1,000 would be refunded
Watch out for
- The same dollars can't be used for both a credit and a tax-free 529 withdrawal or scholarship. Coordinate them.
- The 2025 tax law requires a work-valid Social Security number, not just an , for the education credits. The AOTC needs one for the taxpayer and the student. From 2026 the Lifetime Learning Credit needs one too.
- If the parents claim the student as a , only the parents can take the credit, even if the student paid. If they could claim the student but don't, the student can take it, though usually not the refundable part.
Draft explainer. Figures checked against IRS Rev. Proc. 2025-32 and the current text on November 4, 2026. Not yet reviewed by a licensed tax professional.
Sources
History
Changed by the 2025 tax lawAdded in 1997 by the Taxpayer Relief Act of 1997. Last changed July 4, 2025 by the One Big Beautiful Bill Act (2025).
Every change, newest first (13)
- July 4, 2025One Big Beautiful Bill Act (2025)
- December 27, 2020Consolidated Appropriations Act, 2021
- March 23, 2018Consolidated Appropriations Act, 2018
- December 22, 2017Tax Cuts and Jobs Act (2017)
- December 18, 2015Consolidated Appropriations Act, 2016 (PATH Act)
- June 29, 2015Public Law 114-27
- December 19, 2014Tax Increase Prevention Act of 2014
- January 2, 2013American Taxpayer Relief Act of 2012
- December 17, 2010Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
- March 23, 2010Patient Protection and Affordable Care Act (2010)
- February 17, 2009Public Law 111-5
- June 7, 2001Economic Growth and Tax Relief Reconciliation Act of 2001
- August 5, 1997Taxpayer Relief Act of 1997 · added this section
The law as written
Current through Public Law 119-102. Amendment notes omitted.
Structure
- (a) Allowance of credit
- (b) American Opportunity Tax Credit
- (c) Lifetime Learning Credit
- (d) Limitations based on modified adjusted gross income
- (e) Election not to have section apply
- (f) Definitions
- (g) Special rules
- [(h) Repealed. Pub. L. 116–260, div. EE, title I, § 104(a)(2), Dec. 27, 2020, 134 Stat. 3041]
- (i) Portion of American Opportunity Tax Credit made refundable
- (j) Regulations
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the amount equal to the sum of—
the American Opportunity Tax Credit, plus
the Lifetime Learning Credit.
In the case of any eligible student for whom an election is in effect under this section for any taxable year, the American Opportunity Tax Credit is an amount equal to the sum of—
100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus
25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.
An election to have this section apply with respect to any eligible student for purposes of the American Opportunity Tax Credit under subsection (a)(1) may not be made for any taxable year if such an election (by the taxpayer or any other individual) is in effect with respect to such student for any 4 prior taxable years.
The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an individual unless such individual is an eligible student for at least one academic period which begins during such year.
The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution.
The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for qualified tuition and related expenses for the enrollment or attendance of a student for any academic period if such student has been convicted of a Federal or State felony offense consisting of the possession or distribution of a controlled substance before the end of the taxable year with or within which such period ends.
For purposes of this subsection, the term “eligible student” means, with respect to any academic period, a student who—
meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on the date of the enactment of this section, and
is carrying at least ½ the normal full-time work load for the course of study the student is pursuing.
No American Opportunity Tax Credit shall be allowed under this section for any taxable year in the disallowance period.
For purposes of subparagraph (A), the disallowance period is—
the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of the American Opportunity Tax Credit under this section was due to fraud, and
the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of the American Opportunity Tax Credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
In the case of a taxpayer who is denied the American Opportunity Tax Credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no American Opportunity Tax Credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.
The Lifetime Learning Credit for any taxpayer for any taxable year is an amount equal to 20 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished during any academic period beginning in such taxable year) as does not exceed $10,000.
The qualified tuition and related expenses with respect to an individual who is an eligible student for whom a 1 American Opportunity Tax Credit under subsection (a)(1) is allowed for the taxable year shall not be taken into account under this subsection.
For purposes of paragraph (1), qualified tuition and related expenses shall include expenses described in subsection (f)(1) with respect to any course of instruction at an eligible educational institution to acquire or improve job skills of the individual.
The American Opportunity Tax Credit and the Lifetime Learning Credit shall each (determined without regard to this paragraph) be reduced (but not below zero) by the amount which bears the same ratio to each such credit (as so determined) as—
the excess of—
the taxpayer’s modified adjusted gross income for such taxable year, over
$80,000 ($160,000 in the case of a joint return), bears to
$10,000 ($20,000 in the case of a joint return).
For purposes of this subsection, the term “modified adjusted gross income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
A taxpayer may elect not to have this section apply with respect to the qualified tuition and related expenses of an individual for any taxable year.
For purposes of this section—
The term “qualified tuition and related expenses” means tuition and fees required for the enrollment or attendance of—
the taxpayer,
the taxpayer’s spouse, or
any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,
at an eligible educational institution for courses of instruction of such individual at such institution.
Such term does not include expenses with respect to any course or other education involving sports, games, or hobbies, unless such course or other education is part of the individual’s degree program.
Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual’s academic course of instruction.
For purposes of determining the American Opportunity Tax Credit, subparagraph (A) shall be applied by substituting “tuition, fees, and course materials” for “tuition and fees”.
The term “eligible educational institution” means an institution—
which is described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088), as in effect on the date of the enactment of this section, and
which is eligible to participate in a program under title IV of such Act.
No credit shall be allowed under subsection (a) to an individual unless the individual includes on the return of tax for the taxable year—
such individual’s social security number, and
in the case of a credit with respect to the qualified tuition and related expenses of an individual other than the taxpayer or the taxpayer’s spouse, the name and social security number of such individual.
No American Opportunity Tax Credit shall be allowed under this section unless the taxpayer includes the employer identification number of any institution to which the taxpayer paid qualified tuition and related expenses taken into account under this section on the return of tax for the taxable year.
For purposes of this paragraph, the term “social security number” shall have the meaning given such term in section 24(h)(7).
The amount of qualified tuition and related expenses otherwise taken into account under subsection (a) with respect to an individual for an academic period shall be reduced (before the application of subsections (b), (c), and (d)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as—
a qualified scholarship which is excludable from gross income under section 117,
an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code, or under chapter 1606 of title 10, United States Code, and
a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such individual’s educational expenses, or attributable to such individual’s enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States.
If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins—
no credit shall be allowed under subsection (a) to such individual for such individual’s taxable year,
qualified tuition and related expenses paid by such individual during such individual’s taxable year shall be treated for purposes of this section as paid by such other taxpayer, and
a statement described in paragraph (8) and received by such individual shall be treated as received by the taxpayer.
If qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year.
No credit shall be allowed under this section for any expense for which a deduction is allowed under any other provision of this chapter.
If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year.
If the taxpayer is a nonresident alien individual for any portion of the taxable year, this section shall apply only if such individual is treated as a resident alien of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.
Except as otherwise provided by the Secretary, no credit shall be allowed under this section unless the taxpayer receives a statement furnished under section 6050S(d) which contains all of the information required by paragraph (2) thereof.
Forty percent of so much of the credit allowed under subsection (a) as is attributable to the American Opportunity Tax Credit (determined after application of subsection (d) and without regard to this paragraph 2 and section 26(a)) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom subsection (g) of section 1 applies for such taxable year.
The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this section, including regulations providing for a recapture of the credit allowed under this section in cases where there is a refund in a subsequent taxable year of any amount which was taken into account in determining the amount of such credit.