Education tax credits to claim for 2025
Understandably, the cost of higher education can leave you worrying about money. Whether you are attending a public or private school, completing a two or four-year degree, or taking a few courses here and there, the costs of attending educational institutions can leave you in debt. Thankfully, a few education tax breaks for students may help offset some education expenses on your tax return.
Did you know? Students and parents skip education credits worth billions. Make sure you didn’t miss anything—get a Free Second Look at H&R Block and claim money that’s yours.
What is an education tax credit?
An education tax credit is a tax benefit that helps offset the cost of higher education by reducing the amount of federal income tax you owe. Depending on the credit, it may also increase your tax refund if the credit exceeds your tax liability.
Education tax credits differ from deductions because credits reduce taxes owed dollar for dollar, while deductions reduce taxable income.
How do education tax credits reduce taxes owed?
Education tax credits reduce taxes owed dollar-for-dollar. For example, if you owe $3,000 in federal income taxes and qualify for a $2,500 American Opportunity Tax Credit, your tax bill could be reduced to $500. Keep in mind, some credits are partially refundable.
Have other student tax filing questions? Be sure to visit our Tax Guide for College Students and find out about student forms that can be filed for free.
What education tax credits are available?
There are two primary education tax credits available to eligible taxpayers:
- American Opportunity Tax Credit (AOTC)
- Lifetime Learning Credit (LLC)
Both credits help offset qualified higher education expenses, but they have different eligibility requirements, credit amounts, and refundability rules.
| Feature | American Opportunity Tax Credit (AOTC) | Lifetime Learning Credit (LLC) |
| Maximum credit | Up to $2,500 | Up to $2,000 |
| Refundable? | Partially refundable (up to $1,000) | Nonrefundable |
| Years available | First four years | Unlimited |
| Enrollment requirement | At least half-time | One or more courses |
| Degree required | Yes | No |
| Qualified expenses | Tuition, fees, materials | Tuition and required fees |
American Opportunity Credit (AOC)
The American Opportunity Tax Credit (AOTC) allows a maximum credit of $2,500 for qualifying educational expenses paid during the tax year (100% of the first $2,000 of qualified expenses and 25% of the next $2,000 of qualified expenses) for an eligible student attending an eligible educational institution.
In addition, up to 40% ($1,000) of the AOC is refundable, allowing taxpayers who do not have a tax liability to claim the credit.
Example: Eli and Monica pay $8,000 in eligible education expenses for their daughter’s junior year in college. Their tax liability is $1,000. Under the American Opportunity Credit, they qualify for a credit of $2,500, $1,000 of which is refundable.
Lifetime Learning Credit (LLC)
The Lifetime Learning Credit, or LLC, allows a maximum credit of up to $2,000 for qualifying educational expenses paid during the tax year for an eligible student enrolled at an eligible educational institution. The LLC is calculated as 20% of up to $10,000 of qualified education expenses per return. The credit is non-refundable.
Example: Glenn paid qualified tuition of $20,000. He is eligible for a maximum lifetime learning credit of $2,000 ($10,000 × 20%).
Who qualifies for education tax credits and can claim them?
You may qualify for an education tax credit if you paid qualified education expenses for yourself, your spouse, or a dependent attending an eligible educational institution and meet the income and eligibility requirements for the credit being claimed.
Review the list of requirements for claiming education tax credits:
General Requirements
- Must have eligible filing status
- Meet modified adjusted gross income (MAGI) limits
- Have documentation such as Form 1098-T when required
Students
- Paid qualified education expenses
- Attended an eligible educational institution
- Meet credit-specific requirements
- Are not claimed as someone else’s dependent
Parents
- Claim the student as a dependent
- Paid qualified education expenses on behalf of the student
Spouses
- Paid qualified education expenses for a spouse enrolled in eligible education
Dependents
- May qualify a parent or guardian for a credit when claimed as a dependent
American Opportunity Credit (AOC)
- The student must not have had expenses used to figure the AOC in four earlier tax years.
- For at least one academic period during the tax year the student must meet both of the following requirements:
- The student must be a candidate for a degree, certificate, or other recognized educational credential.
- The student must take at least one-half of a full workload, which is determined by the school.
- The student must not have completed the first four years of secondary education.
- The student must not have a federal or state felony conviction for possessing or distributing drugs.
Lifetime Learning Credit (LLC)
- The student must be enrolled or taking courses at an eligible education institution.
- The student must be taking a higher education course or courses to get a degree or other recognized education credential or to get or improve job skills.
How do you claim an education credit?
To claim an education tax credit, follow these steps:
- Confirm eligibility: Determine whether you qualify for the American Opportunity Tax Credit or Lifetime Learning Credit.
- Gather education records: Collect Form 1098-T and records of qualified education expenses.
- Identify eligible expenses: Review tuition, fees, and other qualified education costs paid during the tax year.
- Complete IRS Form 8863: Use Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), to calculate your credit.
- Include the form with your tax return: Submit Form 8863 with your federal income tax return.
- Keep supporting documentation: Retain records of payments and enrollment in case the IRS requests verification.
Tax breaks for students: Understanding what education tax forms you’ll need
When you take educational tax credits, you’ll need to use a few additional forms than you normally would on your tax return. Add these to your list of tax forms that need to be completed as a student:
For the AOTC and LLC
- IRS Form 8863 – Used to claim the American Opportunity Credit (AOTC) and the Lifetime Learning Credit (LLC).
- Form 1098-T –This shows the annual educational expenses you paid, and is referred to as a tuition statement.
- Form 1098-E – If you paid more than $600 in interest, a lender will automatically send you Form 1098-E. You may still deduct interest if you paid less than $600, but you’ll have to ask your servicer for the information.
Considerations for choosing tax credits for education
There are a few things to keep in mind as you claim tax credits for education. Unlike the AOC, the LLC can be claimed an unlimited number of times. Plus, graduate students can qualify for the tax break, too! Also, remember that the AOC and LLC can’t be claimed in the same year for the same student.
To this end, it can help to check with a tax expert to determine the best credit for your unique situation to get you the most bang for your buck! Or you can take the DIY approach. H&R Block’s downloadable do-it-yourself tax software lets you do your taxes at your own pace.
For a complete list of requirements that must be met to claim the AOC and LLC, visit this resource: IRS Publication 970, Tax Benefits for Education.
Other tax benefits and deductions
These credits aren’t the only education tax credits or benefits available to benefit your tax return. Other relevant tax benefits include savings plans, scholarships, and the student loan interest deduction.
How can I get help claiming an education tax credit?
H&R Block offers multiple ways to help you claim an education tax credit, either with help from one of our tax pros or with our easy-to-use online products:
1. File with an H&R Block tax professional to:
- Identify eligible education credits
- Determine which credit provides the greatest tax benefit
- Complete required tax forms
- Maximize your refund based on your situation
2. File online with H&R Block Online to:
- Check eligibility for available education credits
- Calculate your credit amount
- Help complete required forms as part of your return
Get help claiming education tax credits from H&R Block
If you’re looking for assistance navigating tax breaks for education, get help from H&R Block. Whether you file on your own with H&R Block Online or with a tax pro, we can guarantee 100% accuracy and your maximum tax refund or your money back.
Plus, keep in mind that some students can file for free! Find out more about who can file for free with H&R Block Free Online.
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