Education tax credits for college students

Two IRS tax credits pay back part of what you spend on college, and the American Opportunity credit can put up to $1,000 in your pocket even if you owe no tax (unless the under-24 rule applies to you).

Checked against official sources October 11, 2026

Who qualifies

The student can be you, your spouse (if filing jointly) or a dependent claimed on your return, enrolled at an eligible educational institution.
AOTC: the student must be enrolled at least half-time for at least one academic period that begins in the tax year, be pursuing a degree or other recognized credential, not have finished the first 4 years of postsecondary education, and not have a felony conviction for possessing or distributing a controlled substance.
AOTC can be claimed for only 4 tax years per student (the years do not have to be consecutive); the LLC has no limit on years.
LLC: the student can take one or more courses, including courses to get or improve job skills; no degree program or half-time enrollment is required, and drug convictions do not disqualify.
If a parent can claim you as a dependent and does, you cannot claim either credit yourself; the parent claims it for your expenses.
You cannot claim either credit if you file married filing separately, or if your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if married filing jointly), for tax year 2025.
You cannot claim the AOTC and the LLC for the same student in the same year.

What you get

AOTC: up to $2,500 per eligible student a year (100% of the first $2,000 of qualified expenses plus 25% of the next $2,000).
AOTC: 40% of the credit is refundable, so up to $1,000 can come back to you as a refund even if you owe no tax (the IRS says to file to get it even if you are not otherwise required to file). Some students under 24 can't get this refundable part: see the common mistakes below.
LLC: 20% of up to $10,000 of qualified expenses, so up to $2,000 per tax return (not per student); it is nonrefundable and can only reduce tax you owe.
For tax year 2025, both credits shrink if MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if married filing jointly).
Qualified expenses are tuition and enrollment fees; for the AOTC, required course materials count even if not bought from the school, while for the LLC books and supplies count only if they must be paid to the school.

How to apply

Get Form 1098-T (Tuition Statement) from your school, usually by Jan. 31; if it is missing or wrong, contact the school and keep a record that you asked.
Total what you actually paid in qualified expenses during the year, minus tax-free scholarships and grants; the 1098-T amount may differ from what you can claim.
Fill out Form 8863 (Education Credits) and attach it to your Form 1040; the AOTC needs the school's employer identification number (EIN).
Keep receipts and records in case the IRS asks you to prove the claim.

Common mistakes

Counting on the $1,000 refund if you're under 24: you can't get the refundable part if, at the end of the tax year, you were under 18, or 18 with earned income less than half of your support, or 19 to 23 and a full-time student with earned income less than half of your support, AND at least one of your parents was alive, AND you aren't filing a joint return. Then the credit can only lower tax you owe.
Claiming the credit on your own return when a parent claims you as a dependent: only one return can claim it, and a dependent cannot.
Claiming the AOTC for a fifth year: once it has been claimed for a student in 4 earlier tax years (by the student or their parents), only the LLC is left.
Skipping a tax return because you owe nothing: the refundable part of the AOTC is only paid if you file.
Assuming the 1098-T number is the credit amount: it may not match what you paid; use your own records.
How you apply a Pell Grant matters: the IRS Form 8863 instructions show that applying part of a Pell Grant to room and board (making that part taxable) can leave more tuition to count toward the credit.
A wrong claim can mean paying the credit back with interest, penalties, and a ban from the AOTC for 2 to 10 years.

Official pages

Your state's version

Program names, extra state rules and where to apply.

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