What Is Post-Secondary Education for Tax Purposes?

Two federal tax credits are available for post-secondary education expenses: the American Opportunity Tax Credit, worth up to $2,500 per student per year, and the Lifetime Learning Credit, worth up to $2,000 per return. Which one you can claim depends on how far along the student is, whether they’re enrolled at least half-time in a degree program, and your household income. You can use one or the other for a given student in a given year, but not both.¹

Which Schools Qualify

Both credits apply only to expenses paid to an eligible educational institution: a college, university, vocational school, or other post-secondary school that participates in a U.S. Department of Education student aid program.² Virtually all accredited public and private colleges, community colleges, and trade schools fit. The easiest confirmation is Form 1098-T. Eligible institutions are required to send it to enrolled students with a reportable transaction.³ If you receive one, the school qualifies. You can still claim a credit without a 1098-T in limited cases if you can prove enrollment and substantiate expenses.⁴

American Opportunity Credit vs. Lifetime Learning Credit

The AOTC is the more valuable of the two when a student qualifies. It’s worth up to $2,500 per eligible student per year: 100 percent of the first $2,000 in qualified expenses plus 25 percent of the next $2,000. Forty percent of the credit, up to $1,000, is refundable, so you can get money back even if you owe no tax. The AOTC is limited to the first four years of higher education and cannot be claimed more than four tax years per student.⁵

The LLC is worth up to $2,000 per tax return, not per student. It equals 20 percent of the first $10,000 in qualified expenses.⁶ It isn’t refundable, so it can bring your tax bill to zero but won’t produce a refund on its own. In exchange for the smaller ceiling, it’s flexible: no year limit, no degree requirement, no half-time minimum.

Enrollment Rules Are Where They Split

For the AOTC, the student must be enrolled at least half-time for at least one academic period beginning during the tax year and must be pursuing a degree or other recognized credential.⁷ An academic period can be a semester, trimester, quarter, or summer session.

For the LLC, the student only needs to take one or more courses during an academic period that begins in the tax year.⁷ A working professional taking a single job-skills course qualifies. That makes the LLC the practical choice for graduate students, career changers, and part-time learners at eligible institutions.

What Counts as a Qualified Expense

Both credits start with tuition and fees required for enrollment. The expenses must be paid for an academic period that starts during the tax year or in the first three months of the following year.⁸

Books and supplies are treated differently. For the AOTC, books, supplies, and equipment needed for a course of study qualify even if you buy them from a third-party retailer. For the LLC, those same items qualify only if the school requires you to pay for them directly as a condition of enrollment.⁸ Textbooks bought on Amazon count toward the AOTC; they generally won’t count toward the LLC.

You must reduce your qualified expenses by any tax-free educational assistance received during the year, including scholarships, grants, and employer-provided tuition benefits. Only the remaining balance is used to calculate a credit.⁸

Expenses That Never Qualify

Several college costs are permanently excluded from both credits, even when the school requires them:⁸

Room and board, including mandatory on-campus housing and meal plans.
Insurance and medical costs, including student health fees bundled into a tuition bill.
Transportation, parking, and travel.
Courses in sports, games, or hobbies, unless part of the student’s degree program.

The amount reported on Form 1098-T may not match your qualified expenses exactly. Calculating the correct figure is your responsibility.

Income Limits

Both credits phase out at the same thresholds. To claim the full credit, your modified adjusted gross income must be $80,000 or less, or $160,000 or less on a joint return. The credit shrinks between $80,000 and $90,000 (between $160,000 and $180,000 for joint filers) and disappears above $90,000 ($180,000 joint).⁵ These thresholds are not indexed for inflation.⁹

Who Claims It

The eligible student can be you, your spouse on a joint return, or a dependent you claim. If someone else claims you as a dependent, you cannot claim an education credit on your own return. Parents typically claim the credit for a dependent child even when the student paid the tuition bill, because expenses paid by a dependent are treated as paid by the taxpayer who claims them.⁷

Starting in 2026, anyone claiming either credit needs a Social Security Number valid for employment and issued before the return’s due date. If the person claiming the credit isn’t the student, the student also needs a valid SSN.¹⁰

No Double-Dipping

You cannot use the same dollar of education expenses for more than one tax benefit. That means no education credit and tax-free 529 or Coverdell distribution for the same expenses, and no AOTC plus LLC for the same student in the same year.⁸¹

With more than one student, you can claim the AOTC for one and the LLC for another on the same return. With a 529 plan, you can still claim a credit if you apply 529 funds to different expenses than the ones supporting the credit. Families with large tuition bills often pay enough out of pocket to maximize the credit, then cover the rest from a 529 account.

How to File

Claim either credit by filing Form 8863 with your tax return. You’ll need the school’s employer identification number, which appears on Form 1098-T. Complete a separate Part III for each student before filling out the rest of the form.⁴ If your situation involves scholarships, 529 distributions, or employer tuition reimbursement in the same year, IRS Publication 970 covers how the pieces fit together.¹⁰

1
Internal Revenue Service. Compare Education Credits
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Internal Revenue Service. Eligible Educational Institution
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Internal Revenue Service. About Form 1098-T, Tuition Statement
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Internal Revenue Service. Instructions for Form 8863
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Internal Revenue Service. American Opportunity Tax Credit
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Internal Revenue Service. Lifetime Learning Credit
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Internal Revenue Service. Education Credits – AOTC and LLC
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Internal Revenue Service. Qualified Education Expenses
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Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
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Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education