Two federal credits reduce US income tax for college costs: the American Opportunity Credit, worth up to USD 2,500 per student, and the Lifetime Learning Credit, worth up to USD 2,000 per return. Canada dropped its federal education and textbook credits in 2017. What remains there is the tuition amount, which the student claims first and may partly transfer or carry forward. The figures below come from the IRS draft instructions for the 2026 tax year and from Canada Revenue Agency (CRA) pages, with the 2025 rules noted where they differ.
Key takeaways
- The American Opportunity Credit covers 100 percent of the first USD 2,000 and 25 percent of the next USD 2,000 of qualified expenses, with 40 percent refundable. The Lifetime Learning Credit equals 20 percent of up to USD 10,000 and is nonrefundable.
- The income limits did not change from 2025 to 2026: both credits begin to shrink at modified adjusted gross income of USD 80,000 (USD 160,000 for joint filers) and end at USD 90,000 (USD 180,000).
- New for 2026, a valid Social Security number is required for either credit, and for a dependent student as well.
- In Canada, the tuition amount can be transferred up to CAD 5,000 minus what the student used, and unused amounts carry forward only if a return is filed.
- This page is general information, not tax advice, and individual cases depend on facts the sources cannot cover.
The two US credits side by side
The IRS describes the American Opportunity Credit as available for four years per eligible student, who must not have finished the first four years of postsecondary education before the tax year. The Lifetime Learning Credit has no limit on years. Form 8863 is used to figure and claim both. A return may include both credits, but not for the same student in the same year.
| Feature | American Opportunity Credit | Lifetime Learning Credit |
|---|---|---|
| Maximum | USD 2,500 per student | USD 2,000 per return |
| Calculation | 100 percent of first USD 2,000 plus 25 percent of next USD 2,000 | 20 percent of first USD 10,000 |
| Refundable part | 40 percent | None |
| Years available | Four per student | Unlimited |
| Income limit (single, joint) | Ends at USD 90,000 and USD 180,000 | Ends at USD 90,000 and USD 180,000 |
| Institution EIN on Form 8863 | Required | Not required |
Who is excluded and what paperwork is needed
Under the Form 8863 instructions, a person cannot claim either credit when claimed as a dependent on someone else's return, when filing as married filing separately, or when a nonresident alien without a resident alien election. Income matters as well. The credit shrinks for modified adjusted gross income between USD 80,000 and USD 90,000 for single filers and between USD 160,000 and USD 180,000 for joint filers, and it disappears at or above the upper figure. The 2025 instructions and the 2026 draft list the same ranges.
Both credits generally require Form 1098-T from the school. Exceptions exist, for example when expenses were paid entirely with scholarships, or when the school is not required to issue the form. The identification rule is the real change for 2026. The IRS draft instructions say a filer must hold a Social Security number valid for work, issued before the return's due date including extensions, to claim either credit, and one spouse suffices on a joint return. An earlier reading limited the rule to the American Opportunity Credit, and the 2026 draft applies it to both. A dependent student needs a valid number as well. The IRS credit page, reviewed on August 12, 2026, repeats this. The 2026 instructions remain a draft, so the final text should be checked before filing.
How Canada handles tuition
The CRA states that the federal education and textbook tax credits were eliminated in 2017. The tuition amount remains. Fees paid to a post-secondary institution in Canada qualify, and fees paid to each institution must be more than CAD 100. The institution provides Form T2202 or a TL11 form, and fees that an employer paid or reimbursed without including them in income cannot be claimed.
The student claims current-year tuition and any carried-forward amounts first, on Schedule 11, even if someone else paid the fees. Whatever the student does not use can be transferred, up to CAD 5,000 of the federal tuition amount minus what the student used, to a spouse or common-law partner, a parent, or a grandparent, subject to the recipient's ability to use it. Unused amounts can be carried forward, but a return with Schedule 11 must be filed in each year an amount is being carried, and once an amount is carried forward it can no longer be transferred. The CRA page was last modified on November 26, 2025 and announces no change for 2025 or 2026. Provincial amounts may add rules not covered here.
Where AI tools fit into this
No credit rule above depends on artificial intelligence. The relevant question is whether an automated assistant, including a general chatbot, can be relied on to apply these rules. The IRS offers its own interview tool, the Interactive Tax Assistant for education credit eligibility, which asks about filing status, student enrollment, adjusted gross income, who paid the expenses, and the academic period. The tool states that its answers do not constitute written advice under section 6404(f) of the Internal Revenue Code. If an official tool carries that limit, output from a general chatbot deserves at least as much caution. No study of chatbot accuracy on these credits was found for this page, so no accuracy claim is made.
Checklist before filing
- Confirm the tax year, because income limits and identification rules change. The 2026 return, filed in 2027, is the first with the Social Security number rule for both credits.
- Collect the school's Form 1098-T in the United States, or the T2202 in Canada.
- Check whether scholarships, employer payments, or other benefits paid for the same costs.
- Confirm who claims the student, since dependents cannot claim the US credits themselves.
- Compare against the primary source, the IRS form instructions or the CRA page, rather than a summary.
FAQ
Which form claims the US education credits?
Form 8863, according to the IRS. It covers both the American Opportunity Credit and the Lifetime Learning Credit, and the school normally supplies Form 1098-T to support the claim.
Did the US income limits change for 2026?
The IRS draft instructions for 2026 list the same phase-out ranges as the 2025 instructions: USD 80,000 to 90,000 for single filers and USD 160,000 to 180,000 for joint filers. What changed is the Social Security number requirement, which now covers both credits.
Is there a Canadian education tax credit?
The CRA says the federal education and textbook credits ended in 2017. The tuition amount is still claimed, and unused portions can be transferred or carried forward under the rules above.
What happens to unused Canadian tuition amounts?
The student may transfer up to CAD 5,000 minus the amount used, or carry the rest forward. The CRA states that skipping a return in a year means the amount is not carried forward.
Can an AI chatbot decide whether a filer qualifies?
The sources reviewed give no basis to treat chatbot output as a determination. The IRS tool itself says its answers are not written advice, and a tax professional or the agency's own guidance should decide a specific case.
Related reading
- What AI is doing in education
- Limits of AI in education
- How companies report AI cost savings
- Business savings from AI, as measured
More in AI in finance.
Last verified: October 2026
Sources
- Interactive Tax Assistant: education credit eligibility, Internal Revenue Service, 2026
- Education credits: AOTC and LLC, Internal Revenue Service, page reviewed August 2026
- Instructions for Form 8863, Internal Revenue Service, 2025 and 2026 draft
- Publication 970, Tax Benefits for Education, Internal Revenue Service, 2025
- Transferring or carrying forward amounts, Canada Revenue Agency, modified November 2025
- Line 32300, Your tuition, education, and textbook amounts, and Eligible tuition fees, Canada Revenue Agency, 2025