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If you or a dependent paid for college or other post-secondary education in 2026, there are two federal tax credits worth checking: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). You can only claim one per student per year, and picking the wrong one can cost you real money.
American Opportunity Tax Credit (AOTC)
The AOTC is worth up to $2,500 per eligible student: 100% of the first $2,000 in qualified education expenses, plus 25% of the next $2,000. It’s the more generous of the two credits, and 40% of it (up to $1,000) is refundable, meaning you can get money back even if you owe no tax.
The tradeoff is that the AOTC comes with more restrictions. The student must be pursuing a degree or recognized credential, enrolled at least half-time for at least one academic period during the year, and not have finished the first four years of higher education. You can only claim it for a given student for four tax years total.
Lifetime Learning Credit (LLC)
The LLC is worth up to $2,000 per tax return (not per student): 20% of up to $10,000 in qualified expenses across all eligible students combined. It’s fully nonrefundable, so it can reduce your tax bill to zero but won’t generate a refund on its own.
The LLC is far more flexible about who qualifies. There’s no degree requirement, no minimum enrollment level, and no limit on the number of years you can claim it. That makes it the right fit for graduate students, part-time students, and anyone taking courses to improve job skills without pursuing a degree.
Income Limits Are the Same for Both
Both credits share the same modified adjusted gross income (MAGI) phase-out for 2026: full credit up to $80,000 MAGI for single filers ($160,000 married filing jointly), a reduced credit between $80,000 and $90,000 ($160,000 to $180,000 for joint filers), and no credit above $90,000 ($180,000 joint).
Which One Should You Claim
If the student qualifies for the AOTC, it’s almost always the better choice: it’s worth more per student, and part of it is refundable. The LLC becomes the right call when the AOTC’s rules disqualify you: graduate school, less-than-half-time enrollment, a student in year five or beyond of undergraduate study, or non-degree coursework like job-skills training.
With multiple students in the household, you can mix and match: claim the AOTC for one eligible undergraduate and the LLC for another dependent taking non-degree courses, as long as you’re not claiming both credits for the same student in the same year.
Both credits require a Form 1098-T from the educational institution and are claimed using IRS Form 8863.
Source: IRS Publication 970 and Form 8863 instructions, education credits for tax year 2026.
- The AOTC is worth up to $2,500 per student and 40% refundable, but limited to four years and requires at least half-time enrollment in a degree program.
- The Lifetime Learning Credit is worth up to $2,000 per return, fully nonrefundable, but has no year limit and no enrollment or degree requirements.
- Both credits phase out at the same MAGI range: $80,000-$90,000 single, $160,000-$180,000 married filing jointly.
- You cannot claim both credits for the same student in the same tax year, but you can claim different credits for different students.
Families juggling education costs alongside other tax planning should also check the Child Tax Credit rules for younger dependents, and whether the standard deduction or itemizing makes more sense once education credits are factored in.
Bottom Line
Most tax software will pick the better credit automatically once you enter your 1098-T and enrollment details, but it’s worth understanding the tradeoff yourself: the AOTC pays more but has an expiration date per student, while the LLC is smaller but available indefinitely.
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