Education Credit Calculator
By Forrest Baumhover, CFP®, EA · Last verified September 27, 2026
Check whether one student brings you the American opportunity credit (up to $2,500, IRC §25A(b)), the lifetime learning credit (up to $2,000 per return, IRC §25A(c)), or neither. The calculator shows which credit gives more, how much the income phase-out (the rule that shrinks both credits as income rises) leaves you, how much of it can come back as a refund, and who claims it: the parent or the student. It follows Form 8863, the IRS form for these credits, line by line, and stops before the last step, which limits the part of the credit that is not refundable to the tax you owe.
New for 2026: you, and a dependent student, need a Social Security number valid for employment to claim either credit (on a joint return, the IRS draft instructions say one spouse’s number is enough). For 2025, an ITIN (a tax number the IRS gives people who cannot get a Social Security number) still works.
Covers tax years 2025 and 2026 under IRC §25A (as amended by Pub. L. 119-21 for 2026), Form 8863 and its instructions for 2025, the IRS drafts of both for 2026, and Pub. 970 (2025). Last verified 2026-09-27.
The American opportunity credit
The credit equals all of the first $2,000 of a student’s qualified expenses (the tuition, fees and course materials you enter in the form) plus 25% of the next $2,000, so $2,500 once expenses reach $4,000 (IRC §25A(b)(1)). You can claim it for each eligible student on your return. It applies only when every one of these is true, on top of the school and Form 1098-T tests both credits share, and the identifying-number tests:
- No one has claimed it for this student in 4 earlier tax years (IRC §25A(b)(2)(A)).
- The student had not finished the first 4 years of college before the year began (IRC §25A(b)(2)(C)).
- The student attended at least half-time, in a program that leads to a degree, certificate or other credential, for at least one term that began in the year (IRC §25A(b)(2)(B), (b)(3)).
- No court had convicted the student of a federal or state felony drug offense by the end of the year (IRC §25A(b)(2)(D)).
- You put the school’s employer identification number (EIN) on Form 8863; Form 1098-T usually shows it (IRC §25A(g)(1)(B) for 2026, (g)(1)(B)(iii) for 2025). The calculator does not ask about this, so check it yourself.
40% of the credit, up to $1,000 per student, can come back as a refund even if you owe no tax, unless the under-24 rule applies (IRC §25A(i); IRC §1(g)(2)). The rest can only reduce your tax. The under-24 rule applies when all three are true: (1) one of these fits you at year end: you were under 18; you were 18 and your earned income was no more than half your support; or you were 19 to 23, a full-time student, and your earned income was no more than half your support; (2) a parent was alive at year end; (3) you do not file jointly.
The lifetime learning credit
The credit equals 20% of up to $10,000 of qualified expenses, so at most $2,000 per return, however many students you have (IRC §25A(c)(1)). It has no limit on years, no half-time rule and no felony rule, and it covers graduate school and courses you take to get or improve job skills (IRC §25A(c)(2)(B)). None of it is refundable. You cannot claim it for a student in the same year you claim the American opportunity credit for that student (IRC §25A(c)(2)(A)).
Who claims the credit: the parent or the student
The person who claims the student as a dependent claims the credit. The rules treat what the student paid, and what anyone else paid straight to the school, as that person’s payments (IRC §25A(g)(3); Treas. Reg. §1.25A-5(a), (b)). The student then cannot claim either credit.
If no one claims the student, only the student can claim the credit, even for tuition a parent paid; the rules treat the student as receiving the parent’s payment and paying the school (Treas. Reg. §1.25A-1(f)(1), (f)(2) Example 2; Treas. Reg. §1.25A-5(b)(1)). Whether you can claim the student is a separate question with its own tests: the dependent eligibility calculator answers it.
A married couple must file jointly to claim either credit (IRC §25A(g)(6)).
Social Security numbers: 2025 and 2026 differ
For 2025, the student needs a Social Security number, ITIN or ATIN (an IRS number for a child whose adoption is not final). For the American opportunity credit, you and the student each need a number the IRS or the Social Security Administration issued by your return’s due date, including extensions (IRC §25A(g)(1) as in effect for 2025; Pub. 970 (2025)). Pub. 970 (2025) says the IRS treats an ITIN or ATIN you applied for by the due date as issued by then, once the IRS issues it.
For 2026, Pub. L. 119-21 §70606 rewrote the rule for both credits. You need a Social Security number valid for employment that the Social Security Administration issued before your return’s due date, and a student who is your dependent needs one too (IRC §25A(g)(1)(A), (C); IRC §24(h)(7)(B)). An ITIN, an ATIN, or a number marked “not valid for employment” no longer works. On a joint return, the IRS draft instructions for 2026 say one spouse’s valid number is enough, even when the other spouse is the student; the statute itself does not say. If a required number is missing or invalid, the IRS can take the credit off your return without an audit and mail you a notice (IRC §6213(g)(2)(J), as amended by Pub. L. 119-21 §70606(b)). Respond by the date on that notice.
How the income phase-out works
Both credits shrink as your modified adjusted gross income (your AGI plus certain income you excluded from U.S. tax) rises from $80,000 to $90,000, or from $160,000 to $180,000 on a joint return. At or above the top, you get nothing (IRC §25A(d)). For example, a joint return with $165,000 of income keeps three quarters of the credit. The statute fixes these numbers, and they do not change with inflation; they are the same for 2025 and 2026.
When to call a practitioner (a tax professional, such as a CPA or enrolled agent)
- The student has a scholarship or Pell grant that could pay for room and board. Choosing how much of it to treat as income can raise the credit, but it can also raise the student’s tax or cost other credits. That choice needs both returns side by side.
- You could claim the student as a dependent, or the student could claim the credit instead. Either way can come out ahead: the refund rules, both incomes and other credits all matter.
- You are deciding whether to use an American opportunity year now or save it for a costlier year.
- You have more than one student, a 529 plan or Coverdell distribution, or employer education assistance in the same year.
- The IRS denied or reduced an education credit before, or a 2026 identifying-number problem affects your return.
- Your earned income was about half of your support and you are under 24.
Related questions
Whether the student is your dependent, and so who claims the credit: see Can I claim someone as a dependent?. The same age and support tests that decide the refundable part also decide whether a child pays tax on investment income at the parent’s rate: see the kiddie tax calculator. Which filing status you can use: see the filing status calculator.
Common Questions
What is the difference between the American opportunity credit and the lifetime learning credit?
The American opportunity credit pays up to $2,500 per student: all of the first $2,000 of expenses and a quarter of the next $2,000 (IRC §25A(b)(1)). It covers the first four years of college, for a student who attends at least half-time in a degree or credential program, and 40% of it can come back as a refund unless the under-24 rule below applies (IRC §25A(i)). The lifetime learning credit pays 20% of up to $10,000 of expenses, so up to $2,000 per return (IRC §25A(c)(1)). It covers any year of college, graduate school, and courses you take to get or improve job skills, but none of it is refundable.
Can I claim both credits?
Yes, on one return, but not for the same student in the same year (IRC §25A(c)(2)(A)). For example, you can claim the American opportunity credit for your daughter in college and the lifetime learning credit for your own graduate courses.
Who claims the credit, the parent or the student?
Whoever claims the student as a dependent. If you claim your child as a dependent, only you can claim the credit, and the rules treat the expenses your child paid as yours (IRC §25A(g)(3); Treas. Reg. §1.25A-5(a)). If no one claims the student as a dependent, only the student can claim it, even for tuition a parent paid (Treas. Reg. §1.25A-1(f)(1)). The dependent eligibility calculator on this site answers whether you can claim the student at all.
What changes for 2026?
Starting with 2026 returns, you need a Social Security number valid for employment, issued before your return’s due date, to claim either credit, and a dependent student needs one too (IRC §25A(g)(1) as amended by Pub. L. 119-21 §70606, for taxable years beginning after December 31, 2025). An ITIN no longer works for you or a dependent student; on a joint return, the IRS draft instructions for 2026 say one spouse’s valid number is enough, even when the other spouse is the student. For 2025 an ITIN still counts. The dollar amounts and the income limits stay the same.
Do books count?
For the American opportunity credit, yes: books, supplies and equipment the courses need count even if you buy them somewhere other than the school (IRC §25A(f)(1)(D)). For the lifetime learning credit, they count only when you must buy them from the school to enroll. Room and board, insurance, medical fees and transportation never count, even when the school bills them (Instructions for Form 8863, Qualified Education Expenses).
How do scholarships and Pell grants affect the credit?
Tax-free scholarships, Pell grants, tax-free employer education assistance and veterans’ education benefits reduce the expenses the credit counts (IRC §25A(g)(2)). Student loans, gifts, inheritances and savings do not (Treas. Reg. §1.25A-5(c) Example 5 for loans). A student can sometimes choose to treat part of a scholarship as taxable income so that more of the tuition counts toward the credit (Pub. 970 (2025), Coordination with Pell grants and other scholarships). Whether that helps depends on both the student’s and the parent’s returns, so take that choice to a practitioner.
I am married. Can I claim an education credit on a separate return?
No. A married person gets neither credit on a separate return; you must file jointly (IRC §25A(g)(6)).
I am under 24. Why is none of my American opportunity credit refundable?
None of it is refundable if all three are true: (1) one of these fits you at the end of the year: you were under 18; you were 18 and your earned income was not more than half of your own support; or you were 19 to 23, a full-time student, and your earned income was not more than half of your own support; (2) a parent was alive at the end of the year; (3) you do not file a joint return (IRC §25A(i); IRC §1(g)(2)). If the rule applies, the whole credit can still reduce your tax, but only down to zero; you lose any part larger than your tax. The same tests decide whether the “kiddie tax” (the rule that makes a child pay tax on investment income at the parent’s rate) applies, and the kiddie tax calculator on this site runs them.
Is this calculator free?
Yes. It is free, with no signup. It shows each test it checks for both credits, and each line it computes, with its citation.
More from the Desk
More practitioner writing from Forrest Baumhover, CFP®, EA at The Federal Tax Desk on Substack.
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