2025 American Opportunity Credit
For 2025, the American Opportunity Credit is $2,500 (Maximum credit), $2,000 (Expenses credited in full), $2,000 (Further expenses credited in part) and 25% (Rate on the further expenses).
Effective 2025-01-01Source: Publication 970 (2025), Tax Benefits for Education (IRS)Verified 2026-08-29
Compared with 2024
Every figure on this page is unchanged from 2024.
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Maximum credit | $2,500 | $2,500 | +$0 (+0.0%) |
| Expenses credited in full | $2,000 | $2,000 | +$0 (+0.0%) |
| Further expenses credited in part | $2,000 | $2,000 | +$0 (+0.0%) |
| Rate on the further expenses | 25% | 25% | +0% (+0.0%) |
Who it applies to
The credit goes to the person who pays qualified education expenses for themselves, their spouse, or a dependent they claim on their return, and it is figured per student rather than per return. Expenses a dependent pays, or that a third party pays for that dependent, are treated as paid by you. The student must not have completed the first four years of postsecondary education before 2025, must not have had the credit claimed for them in four earlier tax years, must have been enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential for at least one academic period beginning in the year, and must not have been convicted of a felony for possessing or distributing a controlled substance as of the end of 2025. You cannot claim the credit if your filing status is married filing separately, if you are claimed as a dependent on someone else's return, if your modified adjusted gross income reaches the ceiling Publication 970 sets for your filing status, or if you or your spouse were a nonresident alien for any part of the year and did not elect to be treated as a resident alien.
What changed this year, and why
For 2025, Publication 970 sets the American opportunity credit at up to $2,500 of adjusted qualified education expenses for each student who qualifies, and nothing in the publication's What's New items for the year moves that ceiling. The change worth planning for arrives the year after: beginning in 2026, an individual claiming the American opportunity credit must have a Social Security number valid for work that was issued before the due date of the return, and where the person claiming the credit is not the student, the student will also need a valid SSN. For 2025 the identification rule is narrower. A taxpayer identification number must have been issued by the due date of the return, including extensions, for the filer and for the student, and without it the credit cannot be claimed on an original or an amended return.
Common questions
- How much is the American opportunity credit for 2025?
- For 2025 you may be able to claim up to $2,500 for adjusted qualified education expenses paid for each student who qualifies. The credit is figured per student rather than per return, so a household paying expenses for more than one eligible student can claim it for each of them. Reaching the full $2,500 for a student takes enough adjusted qualified education expenses, and the credit can still be reduced by your modified adjusted gross income.
- Is the American opportunity credit refundable?
- Partly. Publication 970 says a portion of the American opportunity credit may be refundable, which means that if the refundable part of your credit is more than your tax, the excess is refunded to you. The remainder is nonrefundable and can only reduce the income tax you owe. The nonrefundable part can be limited by the amount of your tax, and the credit as a whole can be limited by your income.
- Who counts as an eligible student for the American opportunity credit?
- A student who had not completed the first four years of postsecondary education before 2025, whose expenses were not used for the credit in four earlier tax years, who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential for at least one academic period beginning in the year, and who had no federal or state felony conviction for possessing or distributing a controlled substance as of the end of 2025. Each institution sets its own half-time standard.
- How many years can you claim the American opportunity credit for one student?
- The same student's expenses can support the American opportunity credit for no more than four tax years, counting years claimed by anyone, so years a parent claimed it for a student count against the student's own total. If the credit has already been claimed for that student in four earlier tax years, it is gone; if it has been claimed in three or fewer, that requirement is met. The lifetime learning credit carries no limit on the number of years.
- What education expenses qualify for the American opportunity credit?
- Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution, together with books, supplies, and equipment needed for a course of study, whether or not they are bought from the school. Student activity fees count only where the institution requires them as a condition of enrollment or attendance. Insurance, medical expenses including student health fees, room and board, transportation, and similar personal or family expenses do not qualify, even if the school requires payment.
- Can I claim the American opportunity credit and the lifetime learning credit for the same student?
- No. For each student you elect only one of the credits for the year, and the same student's expenses cannot be used for both. You can mix them across students, claiming the American opportunity credit for one student and the lifetime learning credit for another in the same year. Publication 970 notes that when both are available for a student, the American opportunity credit will always be the larger of the two.
- Why can't I claim the American opportunity credit?
- Publication 970 lists the usual blocks. Your filing status is married filing separately; you are claimed as a dependent on another person's return; your modified adjusted gross income is at or above the ceiling for your filing status; you or your spouse were a nonresident alien for part of the year without electing resident treatment; or you or the student were not issued an SSN, ATIN, or ITIN by the due date of the return, including extensions.
- How do I claim the American opportunity credit, and do I need Form 1098-T?
- You claim it by completing Form 8863 and submitting it with your Form 1040, and you must give the educational institution's employer identification number on Form 8863. The law generally requires that you or a dependent received Form 1098-T from an eligible educational institution. You can still claim the credit where the school is not required to furnish that statement, or refuses to, provided you can show enrollment and substantiate the payments.
Every amount on this page is a published figure rather than yours. The American Opportunity Credit calculator takes the number you enter and works it out against them, showing which published figure it used.
40% of the credit is refundable, the rest only offsets tax
The American Opportunity Credit is split into two parts. The credit covers the first $2,000 of qualified education expenses in full, plus 25% of the next $2,000 of expenses, producing a maximum credit of $2,500 per eligible student. According to IRS rules for 2025, 40% of the calculated credit amount is refundable, meaning that even if the taxpayer owes zero tax, they can still receive that share as a refund payment. The remaining portion of the credit is nonrefundable, so it can only be used to reduce the taxpayer's federal income tax liability to zero but cannot generate a refund beyond that. In other words, the nonrefundable share offsets tax dollar for dollar, and any amount above the taxpayer's liability is lost. The refundable share, by contrast, is paid out to the taxpayer regardless of tax owed. Taxpayers with little or no tax liability may still benefit from the credit because of this refundable feature, but they cannot receive the nonrefundable share as cash if their tax liability is too small to absorb it.
Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable
Publication 970 (2025), Tax Benefits for Education (IRS)
The income at which you lose the credit entirely
The American Opportunity Credit is reduced when a taxpayer's modified adjusted gross income (MAGI) exceeds certain thresholds and is eliminated entirely once MAGI reaches the upper limit. For 2025, if MAGI is $90,000 or more for a single filer, head of household, or qualifying surviving spouse, no American Opportunity Credit is allowed. For married couples filing jointly, the complete phaseout occurs at MAGI of $180,000 or more. Between the lower threshold and these upper limits, the credit is gradually reduced. This means that a single taxpayer with MAGI below $90,000 can claim the full credit (up to $2,500 per eligible student), while a single taxpayer with MAGI of $90,000 or more cannot claim any credit at all. Similarly, a married couple filing jointly with MAGI below $180,000 can claim the full credit, but at $180,000 or above, the credit is zero. These income limits apply to the taxpayer claiming the credit, not to the student.
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.
Publication 970 (2025), Tax Benefits for Education (IRS)
The same student can be claimed in only four tax years
The American Opportunity Credit can be claimed for a given student for no more than four tax years in total. If the student had qualified expenses that were used to figure this credit in any four earlier tax years, the student is no longer an eligible student for this credit in 2025 or any future year. The four-year limit counts every year the credit was claimed for that student, regardless of whether the taxpayer was the student's parent, the student themselves, or someone else. For example, if a student's parents claimed the credit for three prior years and the student later claimed it for one year, that student has reached the four-year maximum. Once the limit is reached, the student's expenses may still qualify for the Lifetime Learning Credit, which has no annual or lifetime claim limit, but the more generous American Opportunity Credit is no longer available for that student.
The student didn’t have expenses that were used to figure an American opportunity credit in any 4 earlier tax years.
Publication 970 (2025), Tax Benefits for Education (IRS)
What counts as having finished the first four years
A student is ineligible for the American Opportunity Credit if they have already finished the first four years of postsecondary education before the tax year begins. The educational institution determines whether the student has completed four years, generally corresponding to freshman through senior standing. Importantly, academic credit awarded solely because of the student's performance on proficiency examinations does not count toward this four-year total. A student who has not been awarded four years of academic credit by their institution as of the beginning of 2025 still meets this requirement, even if they have taken many courses. For example, a student classified by their college as a fourth-year senior at the start of 2025 would generally not be eligible, but a student classified as a fifth-year undergraduate or a graduate student might still qualify if they had not completed four years before 2025. This rule ensures the credit is targeted at students in the early years of their postsecondary education.
Completion of first 4 years. A student has completed the first 4 years of postsecondary education if the institu- tion at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2025.
Publication 970 (2025), Tax Benefits for Education (IRS)
Half-time enrollment in a degree program is required
To be an eligible student for the American Opportunity Credit, the student must be enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential for at least one academic period that begins during the tax year (or in the first three months of the following year if qualified expenses were paid in the tax year). Each eligible educational institution sets its own standard for what constitutes half-time enrollment, but the standard may not be lower than the standards established by the U.S. Department of Education under the Higher Education Act. This means a student taking only one class per semester might not qualify if the institution considers that less than half-time. The half-time requirement applies to at least one academic period in the year, not to the entire year, so a student who was half-time for only the fall semester still meets this test. Courses that do not lead to a recognized credential do not satisfy this requirement.
For at least one academic period beginning in 2025 (or the first 3 months of 2026 if the qualified expenses were paid in 2025), the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
Publication 970 (2025), Tax Benefits for Education (IRS)
A felony drug conviction disqualifies the student
A student who has been convicted of a felony for possessing or distributing a controlled substance under federal or state law is ineligible for the American Opportunity Credit. The conviction must have occurred by the end of the tax year for which the credit is claimed. This disqualification applies only to the American Opportunity Credit; the student's expenses may still qualify for the Lifetime Learning Credit, which has no felony-conviction restriction. The rule looks at whether the student themselves has such a conviction, not the taxpayer claiming the credit. If a student has a disqualifying felony drug conviction, the taxpayer cannot claim the American Opportunity Credit for that student's expenses for any year after the conviction. This requirement is one of several eligibility conditions that must all be met simultaneously, so a student who fails any one of them cannot generate an American Opportunity Credit for that tax year.
As of the end of 2025, the student had not been con- victed of a federal or state felony for possessing or distributing a controlled substance.
Publication 970 (2025), Tax Benefits for Education (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 970 (2025), Tax Benefits for Education (IRS)
- Maximum credit
Maximum credit Up to $2,500 credit per eligible student
- Expenses credited in full
100% of the first $2,000 of qualified education expen- ses you paid for the eligible student
- Further expenses credited in part
25% of the next $2,000 of qualified education expen- ses you paid for that student
- Rate on the further expenses
25% of the next $2,000 of qualified education expen- ses you paid for that student