Compare Education Tax Credits for 2025
The IRS offers two valuable education tax credits: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Each has different eligibility requirements, maximum amounts, and refundability rules.
- AOTC: Up to $2,500 per student (40% refundable)
- LLC: Up to $2,000 per tax return (non-refundable)
- Cannot claim both credits for the same student
- Income phaseouts apply to both credits
Enter your information below to see which credit provides the greater benefit for your situation and how much you may save.
Frequently Asked Questions About Education Credits
What is the difference between AOTC and Lifetime Learning Credit?
+
The American Opportunity Tax Credit (AOTC) offers up to $2,500 per student for the first 4 years of college, calculated as 100% of the first $2,000 plus 25% of the next $2,000 in qualified expenses. Importantly, 40% of AOTC (up to $1,000) is refundable. The Lifetime Learning Credit (LLC) provides up to $2,000 per tax return (20% of $10,000 in expenses) for any level of education with no limit on years, but is entirely non-refundable. AOTC requires at least half-time enrollment, while LLC has no minimum enrollment requirement.
Can I claim both AOTC and LLC for the same student?
+
No, you cannot claim both credits for the same student in the same tax year. However, if you have multiple students, you can strategically claim AOTC for one student and LLC for another, provided each meets their respective eligibility requirements. For example, you might claim AOTC for an undergraduate child and LLC for yourself taking graduate courses.
What is the MAGI phaseout range for education credits in 2025?
+
For tax year 2025, both AOTC and LLC begin to phase out when your Modified Adjusted Gross Income (MAGI) exceeds $80,000 for single filers or $160,000 for married filing jointly. The credits are completely phased out at $90,000 (single) or $180,000 (MFJ). Within the phaseout range, your credit is reduced proportionally. Those filing as married filing separately are generally ineligible for either credit.
Which education credit should I claim?
+
Generally, claim AOTC if: you're in your first 4 years of undergraduate study, enrolled at least half-time, pursuing a degree, and have at least $4,000 in qualified expenses. AOTC's 40% refundability often makes it more valuable. Choose LLC if: you've already claimed AOTC for 4 years, you're taking graduate courses, you're enrolled less than half-time, you're not pursuing a degree, or you're improving job skills.
What expenses qualify for education tax credits?
+
Qualified expenses for both credits include tuition and required enrollment fees paid to eligible educational institutions. For AOTC specifically, course-related materials such as books, supplies, and equipment also qualify, even if not purchased from the school. Expenses that do NOT qualify include: room and board, transportation, insurance, medical expenses, student activity fees (unless required), and expenses paid with tax-free scholarships or grants.
Is the American Opportunity Credit refundable?
+
Yes, 40% of the AOTC (up to $1,000 maximum) is refundable, meaning you can receive this amount even if you owe no federal income tax. The remaining 60% is non-refundable and can only reduce your tax liability to zero. In contrast, the Lifetime Learning Credit is entirely non-refundable - it can reduce your tax to zero but won't generate a refund. This refundable feature makes AOTC particularly valuable for students with lower tax liabilities.
