American Opportunity Tax Credit (AOTC): Amounts, Rules and Calculator

“Caution: DRAFT—NOT FOR FILING
This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information. Do not file draft forms.
[…]
Forms and instructions are subject to OMB approval before they can be officially released, so we post drafts of them until they are approved. Drafts of instructions and publications usually have some additional changes before their final release.”

“You may be able to claim a credit of up to $2,500 for adjusted qualified education expenses (defined later) paid for each student who qualifies for the American opportunity credit. This credit equals 100% of the first $2,000 and 25% of the next $2,000 of adjusted qualified education expenses paid for each eligible student. The amount of your credit is gradually reduced (phased out) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim a credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).”

“You may be able to claim a credit of up to $2,500 for adjusted qualified education expenses (defined later) paid for each student who qualifies for the American opportunity credit. This credit equals 100% of the first $2,000 and 25% of the next $2,000 of adjusted qualified education expenses paid for each eligible student. The amount of your credit is gradually reduced (phased out) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim a credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).”

“In the case of any eligible student for whom an election is in effect under this section for any taxable year, the American Opportunity Tax Credit is an amount equal to the sum of— (A) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus (B) 25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.”

“Example. You are filing a joint return and your MAGI is $165,000. In 2025, you paid $5,000 of qualified education expenses. You figure a tentative American opportunity credit of $2,500 (100% of the first $2,000 of qualified education expenses, plus 25% of the next $2,000 of qualified education expenses). Because your MAGI is within the range of incomes where the credit must be reduced, you must multiply your tentative credit ($2,500) by a fraction. The numerator (top part) of the fraction is $180,000 (the upper limit for those filing a joint return) minus your MAGI. The denominator (bottom part) is $20,000, the range of incomes for the phaseout ($160,000 to $180,000). The result is the amount of your phased out (reduced) American opportunity credit ($1,875).”

“The American Opportunity Tax Credit and the Lifetime Learning Credit shall each (determined without regard to this paragraph) be reduced (but not below zero) by the amount which bears the same ratio to each such credit (as so determined) as—
(A) the excess of—
(i) the taxpayer’s modified adjusted gross income for such taxable year, over
(ii) $80,000 ($160,000 in the case of a joint return), bears to
(B) $10,000 ($20,000 in the case of a joint return).”

“[(h) Repealed. Pub. L. 116-260, div. EE, title I, § 104(a)(2), Dec. 27, 2020, 134 Stat. 3041]
[…]
Subsec. (h). Pub. L. 116-260, § 104(a)(2), struck out subsec. (h) which related to inflation adjustments for the Lifetime Learning Credit for taxable years beginning after 2001.”

“The amendments made by this section [amending this section and sections 62, 74, 86, 135, 137, 219, 221, and 469 of this title and repealing section 222 of this title] shall apply to taxable years beginning after December 31, 2020.”

“You cannot claim an education credit if:
You are claimed as a dependent on another tax return, such as your parent’s return.
Your filing status is married filing separately.
You (or your spouse) were a non-resident alien for any part of the year and did not choose to be treated as a resident alien for tax purposes (find more information in Publication 519, U.S. Tax Guide for Aliens).
Your modified adjusted gross income (MAGI), is over $90,000 ($180,000 for joint filers).”

“Generally, your MAGI is the amount on your Form 1040 or 1040-SR, line 11b. However, if you’re filing Form 2555, Foreign Earned Income; or Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa; or are excluding income from Puerto Rico, add to the amount on your Form 1040 or 1040-SR, line 11b, the amount of income you excluded. For details, see Pub. 970.”

“Generally, your MAGI is the amount on your Form 1040 or 1040-SR, line 11a. However, if you’re filing Form 2555, Foreign Earned Income; or filing Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa; or excluding income from Puerto Rico, add to the amount on your Form 1040 or 1040-SR, line 11a, the amount of income you excluded. For details, see Pub. 970.”

“MAGI when using Form 1040 or 1040-SR. If you file Form 1040 or 1040-SR, your MAGI is the AGI on line 11a of that form, modified by adding back any:
1. Foreign earned income exclusion,
2. Foreign housing exclusion,
3. Foreign housing deduction,
4. Exclusion of income by bona fide residents of American Samoa, and
5. Exclusion of income by bona fide residents of Puerto Rico.”

“The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You can’t claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).”

“Generally, you can claim the American opportunity credit for a student on a 2026 tax return only if all of the following seven requirements are met.
1. As of the beginning of 2026, the student had not completed the first 4 years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. For this purpose, don’t include academic credit awarded solely because of the student’s performance on proficiency examinations.
2. The American opportunity credit has not been claimed (by you or anyone else) for this student for any 4 tax years before 2026. If the American opportunity credit has been claimed for this student for any 3 or fewer tax years before 2026, this requirement is met.
[…]
3. For at least one academic period beginning or treated as beginning (see next) in 2026, the student both:
a. Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and
b. Carried at least one-half the normal full-time workload for his or her course of study.
[…]
4. As of the end of 2026, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance.
5. You (or your spouse if filing jointly) and the student (if the student is a dependent on your tax return) must have been issued valid SSNs before the due date of your 2026 return (including extensions).
6. The student received Form 1098-T from the educational institution for 2026 or you followed the procedures under Form 1098-T requirement, earlier.
7. You must provide the educational institution’s EIN on your Form 8863.”

“Generally, you can claim the American opportunity credit for a student on a 2025 tax return only if all of the following seven requirements are met.
[…]
5. Filers and students must have been issued a TIN by the due date of their 2025 return (including extensions).
[…]”

“Generally, you can claim the American opportunity credit for a student only if all of the following four requirements are met.”

“Caution: Don’t claim the American opportunity credit for 2 years after there was a final determination that your claim was due to reckless or intentional disregard of the rules or 10 years after there was a final determination that your claim was due to fraud.”

“Who cannot claim a credit. You cannot claim an education credit on a 2025 tax return if any of the following apply. 1. You’re claimed as a dependent on another person’s tax return, such as your parent’s return. 2. Your filing status is married filing separately. 3. You (or your spouse) were a nonresident alien for any part of 2025 and didn’t elect to be treated as a resident alien for tax purposes. 4. Your MAGI is $180,000 or more if married filing jointly; or $90,000 or more if single, head of household, or qualifying surviving spouse with dependent child. 5. The student has not been issued a TIN by the due date of his or her 2025 return (including extensions).”

“Who cannot claim a credit. You cannot claim an education credit on a 2026 tax return if any of the following apply. 1. You’re claimed as a dependent on another person’s tax return, such as your parent’s return. 2. Your filing status is married filing separately. 3. You (or your spouse) were a nonresident alien for any part of 2026 and didn’t elect to be treated as a resident alien for tax purposes. 4. Your MAGI is $180,000 or more if married filing jointly, or $90,000 or more if single, head of household, or qualifying surviving spouse with dependent child. 5. You (or your spouse if filing jointly) and the student (if the student is a dependent on your tax return) have not been issued valid SSNs before the due date of your 2026 return (including extensions).”

“You can’t claim the American opportunity credit for 2025 if any of the following apply.
Your filing status is married filing separately.
You are claimed as a dependent on another person’s tax return, such as your parent’s return. See Who Can Claim a Dependent’s Expenses, later.
Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if married filing jointly). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit.
You (or your spouse) were a nonresident alien for any part of 2025 and the nonresident alien didn’t elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Pub. 519, U.S. Tax Guide for Aliens.
You weren’t issued an SSN (or ITIN) by the due date of your 2025 return (including extensions). You can’t claim the American opportunity credit on either your original or an amended 2025 return. Also, you can’t claim this credit on your original or an amended 2025 return for a student who wasn’t issued an SSN, ATIN, or ITIN by the due date of your return (including extensions). If an ATIN or ITIN is applied for on or before the due date of a 2025 return (including extensions) and the IRS issues an ATIN or ITIN as a result of the application, the IRS will consider the ATIN or ITIN as issued on or before the due date of the return.”

“For purposes of the American opportunity credit, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.”

“Generally, qualified education expenses are amounts paid in 2026 for tuition and fees required for the student’s enrollment or attendance at an eligible educational institution. It doesn’t matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds.”

“For course-related books, supplies, and equipment, only certain expenses qualify.
American opportunity credit: Qualified education expenses include amounts paid for tuition, fees, and course materials, which include books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.
Lifetime learning credit: Qualified education expenses include amounts paid for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance.”

“Qualified education expenses don’t include amounts paid for the following.
Personal expenses. This means room and board, insurance, medical expenses (including student health fees), transportation, and other similar personal, living, or family expenses.
Any course or other education involving sports, games, or hobbies, or any noncredit course, unless such course or other education is part of the student’s degree program or (for the lifetime learning credit only) helps the student acquire or improve job skills.”

“Tax-free educational assistance. For tax-free educational assistance received in 2026, reduce the qualified education expenses for each academic period by the amount of tax-free educational assistance allocable to that academic period.”

“Qualified education expenses paid in 2026 for an academic period that begins in the first 3 months of 2027 can be used in figuring an education credit for 2026 only.”

“You may receive Form 1098-T from the institution reporting payments received in 2026 (box 1). However, the amount in box 1 of Form 1098-T may be different from the amount you paid (or are treated as having paid). In completing Form 8863, use only the amounts you actually paid (plus any amounts you’re treated as having paid) in 2026 (reduced, as necessary, as described under Adjusted Qualified Education Expenses, later).”

“To be eligible to claim the American opportunity credit or lifetime learning credit, the law requires a taxpayer (or a dependent) to have received Form 1098-T from an eligible educational institution, whether domestic or foreign.”

“When figuring an education credit, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. In most cases, the student should receive Form 1098-T from the eligible educational institution by February 2, 2026 (January 31 falls on a Saturday). However, the amount on Form 1098-T might be different from the amount you actually paid and are deemed to have paid.”

“Forty percent of so much of the credit allowed under subsection (a) as is attributable to the American Opportunity Tax Credit (determined after application of subsection (d) and without regard to this paragraph
[footnote 2 omitted]
and section 26(a)) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom subsection (g) of section 1 applies for such taxable year.”

“Forty percent of the American opportunity credit is refundable for most taxpayers. However, if you were under age 24 at the end of 2025 and the conditions listed below apply to you, you can’t claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only.”

“You don’t qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2025, or
b. Age 18 at the end of 2025 and your earned income (defined below) was less than one-half of your support (defined below), or
c. Over age 18 and under age 24 at the end of 2025 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below).
2. At least one of your parents was alive at the end of 2025.
3. You are filing a return as single, head of household, qualifying surviving spouse, or married filing separately for 2025.”

“If you were under age 24 at the end of 2026 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax.
You don’t qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2026, or
b. Age 18 at the end of 2026 and your earned income (defined later) was less than one-half of your support (defined later), or
c. Over age 18 and under age 24 at the end of 2026 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later).
2. At least one of your parents was alive at the end of 2026.
3. You’re not filing a joint return for 2026.”

“Taxpayer identification number (TIN) needed by due date of return. If you haven’t been issued a TIN by the due date of your 2025 return (including extensions), you can’t claim the American opportunity credit on either your original or an amended 2025 return. Also, the American opportunity credit isn’t allowed on either your original or an amended 2025 return for a student who hasn’t been issued a TIN by the due date of your 2025 return (including extensions).”

“Identification requirement. Beginning in tax year 2026, you must have a valid social security number (SSN) to claim the American opportunity credit or the lifetime learning credit. If you are filing a joint return, only one spouse must have a valid SSN. When the student for whom qualified education expenses were paid is your dependent, the student must also have a valid SSN to qualify for the credit.”

“A valid SSN to claim an education credit is one that is valid for employment and that is issued by the Social Security Administration before the due date of your 2026 return (including extensions).”

“Identification requirement. Beginning in 2026, individuals claiming the American opportunity credit or the lifetime learning credit will be required to have a Social Security Number (SSN) that is valid for work and that was issued before the due date of the return. In cases where the individual claiming the credit is not the student for whom the tuition and related expenses were paid, the student will also need a valid SSN in order to qualify for the credit.”

“TIN requirement – Beginning in 2026, new Social Security number requirements apply to claim the AOTC or LLC. You or your spouse (if married filing joint) and the student (if your dependent) must have a Social Security number valid for work and issued before the due date of the 2026 tax return (including extensions).”

“No credit shall be allowed under subsection (a) to an individual unless the individual includes on the return of tax for the taxable year—
(i) such individual’s social security number, and
(ii) in the case of a credit with respect to the qualified tuition and related expenses of an individual other than the taxpayer or the taxpayer’s spouse, the name and social security number of such individual.”

“2025—Subsec. (g)(1). Pub. L. 119-21 amended par. (1) generally.”

“The amendments made by this section [amending this section and section 6213 of this title] shall apply to taxable years beginning after December 31, 2025.”

“Caution: DRAFT—NOT FOR FILING
This is an early release draft of an IRS tax form, instructions, or publication, which the IRS is providing for your information. Do not file draft forms.
[…]
Forms and instructions are subject to OMB approval before they can be officially released, so we post drafts of them until they are approved. Drafts of instructions and publications usually have some additional changes before their final release.”

“Use Form 8863 to figure and claim your education credits, which are based on qualified education expenses paid to an eligible postsecondary educational institution. There are two education credits.
The American Opportunity Credit, part of which may be refundable.
The Lifetime Learning Credit, which is nonrefundable.”

“Education credits help with the cost of higher education. They can reduce the amount of tax owed on your tax return or they may increase your refund. There are two education credits available.
American Opportunity Tax Credit (AOTC) – partially refundable
Lifetime Learning Credit (LLC) – non-refundable”

“You can claim only one of the credits per qualifying student. You can claim both the AOTC and LLC on the same return only if they are not for the same student and the same expenses. No double benefit is allowed.”

“If you are eligible to claim the lifetime learning credit and you are also eligible to claim the American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both.”

“If you pay qualified education expenses for more than one student in the same year, you can choose to claim certain credits on a per-student, per-year basis. This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year.”

“Tip: If you can choose between using a student’s adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit, the American opportunity credit will always be greater than the lifetime learning credit.”