Lifetime learning credit: 20% of up to $10,000, capped at $2,000 per return

How much is the lifetime learning credit?

The lifetime learning credit is 20% of up to $10,000 of qualified education expenses, so the most any household can get is $2,000 a year. The cap applies to the whole return: a couple paying for their own master's degree and a child's community college classes still shares one $2,000 limit (IRS Publication 970, Table 3-1).

For 2026 the rate and the $10,000 base are unchanged from 2025. Rev. Proc. 2025-32, which lists the inflation-adjusted amounts for 2026, does not include the education credits because their dollar limits are not indexed. No 2027 change has been announced; the IRS usually publishes its 2027 inflation figures in October or November 2026.

Is the lifetime learning credit refundable?

No. The LLC can reduce your income tax to zero but cannot produce a refund by itself. If your tax before credits is $700 and your LLC figures to $1,200, you save $700 and the remaining $500 is not paid out.

That makes timing matter. A part-time graduate student with a low income may get little or nothing from the LLC, while the same tuition paid by a working spouse on a joint return can use the full credit. Other nonrefundable credits, such as the saver's credit, draw on the same tax liability, so a large combination may not all fit.

What is the lifetime learning credit income limit for 2026?

The credit starts shrinking once modified AGI passes $80,000 ($160,000 on a joint return) and is gone at $90,000 ($180,000 joint). Married filing separately filers cannot claim it. These are the same ranges that apply to the American Opportunity Credit.

Worked example: a single nurse earning MAGI of $85,000 pays $7,500 for a nurse practitioner program. The starting credit is 20% x $7,500 = $1,500. She is halfway through the $10,000 range, so she keeps 50%: ($90,000 minus $85,000) / $10,000 = 0.5, and the credit is $750.

Who and what qualifies for the LLC tax credit?

You can claim the credit for yourself, your spouse or a dependent enrolled at an eligible educational institution, which includes most accredited colleges, universities and vocational schools that take part in federal student aid programs. The LLC has fewer student tests than the AOTC:

• No degree requirement: one course taken to acquire or improve job skills qualifies.
• No half-time enrollment requirement.
• No limit on the number of years claimed.
• A felony drug conviction does not disqualify the student.
• Graduate, professional and doctoral programs qualify.

Qualified expenses are narrower

Only tuition and fees required for enrollment or attendance count. Books, supplies and equipment count only if they must be paid to the school as a condition of enrollment. A textbook bought separately from a bookstore counts for the AOTC but not for the LLC.

New 2026 SSN requirement

Beginning with 2026 returns, the person claiming the LLC must have a Social Security number valid for work, issued before the return's due date including extensions, and the student needs one too when someone else claims the credit (Pub. 505 (2026)). The school EIN requirement on Form 8863 applies to the AOTC.

Can I claim the lifetime learning credit for graduate school?

Yes. Graduate students turn to the lifetime learning credit because the American Opportunity Credit stops after four years of undergraduate study. Law, medical, MBA and doctoral tuition all count if paid to an eligible institution.

Employer tuition help changes the math. Tax-free educational assistance paid by your employer must be subtracted from your expenses before you figure the credit, so only the part you paid yourself counts.

Choosing between the AOTC and the LLC

For each student you choose one credit per year. Publication 970 says that when a student qualifies for both, the AOTC will always be the larger credit, because it pays 100% on the first $2,000 and part of it is refundable. See the American Opportunity Credit rules for the four-year and half-time tests.

• Undergraduate in years one to four, at least half-time, in a degree program: use the AOTC.
• Fifth-year undergraduate, graduate student or part-time student below half-time: use the LLC.
• Adult taking a single course for work: use the LLC.
• Two children in college: you can use the AOTC for one and the LLC for the other in the same year.

Our education credits hub shows both credits side by side with the other 2026 credits. The credit is claimed on Form 8863, Education Credits, Part III for each student, with the total carried to Schedule 3 (Form 1040).