Are textbooks a qualified education expense for the credit?

Two credits, two answers

The most common mistake with textbooks is to treat the two education credits as having one definition of qualified expenses. Publication 970 gives separate rules. For the American opportunity credit, qualified expenses are tuition, required enrollment fees and course materials that the student needs for a course of study, and the publication states that expenses for books, supplies and equipment needed for a course of study are included whether or not the materials are purchased from the educational institution. That means a textbook from an online seller or a campus bookstore counts for the AOTC if the course needs it.

For the lifetime learning credit, the relevant sentence is narrower: student activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution for enrollment or attendance. A book list that the professor posts and you buy anywhere does not meet that test. A required course materials charge that the school bills with tuition does.

Why the difference matters

Because the AOTC is built on the first $4,000 of expenses, books often fill the gap between tuition and the cap. A student whose tuition is $3,000 and who buys $1,200 of required books elsewhere has $4,200 of AOTC expenses and reaches the full $2,500 credit, because the credit is 100% of the first $2,000 plus 25% of the next $2,000, and nothing beyond $4,000 adds more. Under the LLC the same facts give $3,000 of expenses and a tentative credit of $600; if the school required the books to be paid to it, the base is $4,200 and the credit is $840. The calculator above shows both so you can see what the textbook rule is worth.

The publication's own example for the equipment point is a dental student who must pay the university a fee for renting dental equipment. Because the rental fee must be paid to the university for enrollment and attendance, it is a qualified expense. The line is therefore about the requirement, not the category of item.

Worked example

Maya pays $5,000 of tuition and required fees and spends $900 on books, paper and a graphing calculator her classes require, all from outside vendors. She is a second-year degree student and her MAGI is under $80,000. For the AOTC her expenses are $5,900, but only the first $4,000 count, so the tentative credit is $2,500. If she cannot use the AOTC, for example because it has been claimed for four years, her LLC expenses are $5,000 because the outside purchases do not count, and the tentative credit is $1,000. If the university had billed the books to her account as a required charge, the LLC base would be $5,900 and the credit $1,180.

Things that never count

Room and board is excluded from both credits. So are expenses for courses involving sports, games or hobbies, including noncredit courses, that are not part of the student's degree program; the LLC allows such a course only if the student takes it to acquire or improve job skills. Expenses paid with funds that are tax-free educational assistance, such as a tax-free scholarship or Pell grant, reduce the qualified expenses, and the same expenses cannot support two benefits. The amount on Form 1098-T may differ from what you actually paid, so use the amounts you paid or are deemed to have paid in the tax year. Prepayments in 2025 for an academic period that begins in the first three months of 2026 can count toward the 2025 credit.

The tax-free scholarship rules use yet another definition: course-related books, supplies and equipment must be required of all students in your course of instruction. If you use the same books for a scholarship exclusion and for a credit, check each definition separately.

Where the credits are claimed

Both credits are claimed on Form 8863, with the educational institution's name and employer identification number for the AOTC. Keep receipts for books and supplies, the syllabus or the school's requirement showing the item was needed for the course, and any billing statement showing charges paid to the school. For the credit comparison itself, see our AOTC and lifetime learning calculator.

Sources

• IRS Publication 970, Tax Benefits for Education (2025): Chapters 2 and 3, Related expenses. Read November 2, 2026.

Edition read: Publication 970 (2025), for use in preparing 2025 returns. Dollar limits, income thresholds and dates in this publication are for tax year 2025; check the current publication and form instructions for the year you file. This page summarizes the publication and does not replace it.