U.S. · Education credits
Lifetime learning credit or American opportunity credit?
The American opportunity credit is larger when you qualify; the lifetime learning credit is the fallback.
For one student who qualifies for both, the American opportunity credit (AOTC) is always the larger of the two, according to Publication 970, and you can use only one of them for that student in a year. The AOTC is worth up to $2,500 per student but lasts four tax years and needs a degree-track student enrolled at least half-time. The lifetime learning credit (LLC) is worth up to $2,000 per return, has no year limit and covers any course, including job-skills classes.
Compare the two credits
Result
The short answer
Publication 970 sets the two credits side by side and then settles the question for most families in one sentence: if you have the choice, the American opportunity credit will always be greater than the lifetime learning credit. The choice is made student by student and year by year, and for any one student in any one year you elect one credit, never both. Everything else on this page is about when you actually have the choice, because the AOTC comes with several strings the LLC does not.
Side by side for 2025
| American opportunity credit | Lifetime learning credit | |
|---|---|---|
| Maximum | $2,500 per eligible student | $2,000 per return |
| Income limit (MAGI) | Phases out from $80,000 to $90,000; $160,000 to $180,000 joint | Same range |
| Refundable? | 40% may be refundable | Nonrefundable |
| Years of study | Student must not have finished the first 4 years of postsecondary education before 2025 | All years, including courses to acquire or improve job skills |
| Tax years available | Only 4 tax years per student | Unlimited |
| Program | Pursuing a degree or other recognized credential | Degree not required; one or more courses |
| Workload | At least half-time for one academic period | No half-time rule |
The table is taken from Table 2-1, Table 3-1 and the Appendix of the publication. Two rows decide most cases. First, the year limit: if the AOTC has already been claimed for a student for four earlier tax years, it is gone, and the publication's example of a student whose credit was claimed in 2019, 2020, 2022 and 2024 says only the lifetime learning credit can be claimed for 2025. Second, the program test: a person taking one evening course to improve job skills, with no degree in view, cannot use the AOTC at all but may still use the LLC.
How each credit is figured
The AOTC is 100% of the first $2,000 of qualified education expenses plus 25% of the next $2,000, which is how the $2,500 maximum arises. Spending more than $4,000 on one student adds nothing. Qualified expenses for the AOTC are tuition, required enrollment fees and course materials the student needs for a course of study, whether or not the materials are bought from the school. Room and board never counts.
The LLC is 20% of the first $10,000 of qualified expenses paid for all eligible students on the return, so the cap is $2,000 (20% of $10,000). The difference in design shows up at the low and high ends. At $4,000 of expenses the AOTC pays $2,500 and the LLC pays $800. The LLC only catches up in dollar terms when expenses for several students pile up, which is why the publication lets you mix: you can claim the AOTC for one student and the LLC for another in the same year, and expenses of a student for whom you do not claim the AOTC can feed the LLC.
The income reduction
Both credits shrink as modified adjusted gross income rises through the same range, and both disappear at $90,000 ($180,000 joint). The publication multiplies the tentative credit by a fraction: the upper limit minus your MAGI, over the width of the range. Its AOTC example is a joint return with MAGI of $165,000 and $5,000 of expenses: $2,500 x ($180,000 - $165,000) / $20,000 = $1,875. Its LLC example is a joint return with MAGI of $161,000 and $6,600 of expenses: $1,320 x ($180,000 - $161,000) / $20,000 = $1,254. The calculator above applies the same fraction to both credits so you can see them next to each other for your own numbers.
Worked example
A single filer with MAGI of $85,000 pays $6,000 of qualified expenses for a sophomore who is in a degree program and has never had an AOTC claimed. The tentative AOTC is $2,500 and the tentative LLC is $1,200. Income is halfway through the $10,000 range, so the fraction is ($90,000 - $85,000) / $10,000, or one half. The AOTC becomes $1,250 and the LLC $600. The AOTC is still larger, and 40% of the allowed AOTC may be refundable even if no tax is owed. If the same student were a fifth-year senior, the AOTC would no longer be open and the LLC would be the only choice.
Rules both credits share
Neither credit is available if your filing status is married filing separately or if you can be claimed as a dependent on someone else's return. You, your spouse or a dependent you claim must be the student, and expenses paid by a dependent or by a third party for that dependent are treated as paid by you. The student generally must have received Form 1098-T from the school, with exceptions the publication lists. The AOTC also requires the school's employer identification number on Form 8863, and a taxpayer identification number issued by the due date of the return. You cannot use the same expenses for both a credit and another benefit such as a tax-free 529 distribution.
For the full calculation with phase-outs and tax limits, use our AOTC and lifetime learning credit calculator; this page is the decision guide that sits in front of it.
Sources
- IRS Publication 970, Tax Benefits for Education (2025): Chapters 2 and 3 and the Appendix. 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.
Frequently asked questions
Can I claim both the American opportunity credit and the lifetime learning credit?
Not for the same student in the same year. Publication 970 says you can elect only one credit per student per year, though you may claim the AOTC for one student and the LLC for another.
Which education credit is better?
If you qualify for both for the same student, the publication says the American opportunity credit will always be greater: up to $2,500 per student against up to $2,000 per return.
When can I only use the lifetime learning credit?
When the student is past the first four years of postsecondary education, has already had the AOTC claimed for four tax years, is not in a degree or credential program, or is enrolled less than half-time. The LLC also covers job-skills courses.
What income is too high for these credits in 2025?
The credits are reduced from $80,000 to $90,000 of MAGI ($160,000 to $180,000 on a joint return) and are not allowed at $90,000 or more ($180,000 joint).
Is either credit refundable?
40% of the American opportunity credit may be refundable. The lifetime learning credit is nonrefundable and can only reduce your tax to zero.
Not tax advice
This page summarizes an IRS publication and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm how a rule applies to your return. Everything runs in your browser; nothing you enter is sent anywhere.