Updated October 30, 2026. Quick answer: For tax year 2026 the American Opportunity Tax Credit and the Lifetime Learning Credit phase out together: the credits shrink as modified adjusted gross income rises from $80,000 to $90,000, or from $160,000 to $180,000 (computed: the $160,000 start plus the $20,000 band) on a joint return, under 26 U.S.C. 25A(d). The maximum credits are $2,500 and $2,000. The statute states these as fixed dollars, and the section’s inflation adjustment was repealed. The 2027 version has its own page, the education credits for 2027.
The 2026 credit amounts
Section 25A sets the American Opportunity Tax Credit as the sum of two parts: “100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000”, plus “25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.” That is 100 percent of $2,000 plus 25 percent of $2,000, or $2,000 plus $500, which is $2,500 (computed).
The Lifetime Learning Credit is “20 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished during any academic period beginning in such taxable year) as does not exceed $10,000.” Twenty percent of $10,000 is $2,000 (computed).
| Credit | Formula in section 25A | Maximum for 2026 | Counted |
|---|---|---|---|
| American Opportunity Tax Credit | 100 percent of the first $2,000 of expenses plus 25 percent of the next $2,000 | $2,500 (computed) | Each eligible student |
| Lifetime Learning Credit | 20 percent of expenses up to $10,000 | $2,000 (computed) | The taxpayer |
Part of the American Opportunity credit can be refunded: “Forty percent of so much of the credit allowed under subsection (a) as is attributable to the American Opportunity Tax Credit” is treated as a refundable credit. Forty percent of $2,500 is $1,000 (computed).
The 2026 phase-out range
Subsection (d) reduces both credits by one ratio. Each credit is “reduced (but not below zero) by the amount which bears the same ratio to each such credit (as so determined) as” the ratio of the excess of income over the starting amount to the band width: “the excess of” “(i) the taxpayer’s modified adjusted gross income for such taxable year, over (ii) $80,000 ($160,000 in the case of a joint return), bears to (B) $10,000 ($20,000 in the case of a joint return).” Modified adjusted gross income is defined as “the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.”
| Filing status | Phase-out starts above | Credit fully phased out at |
|---|---|---|
| Any eligible filing status other than a joint return | $80,000 | $90,000 (computed) |
| Married filing jointly | $160,000 | $180,000 (computed) |
The upper ends are the starting points plus the band widths: $80,000 plus $10,000 is $90,000, and $160,000 plus $20,000 is $180,000 (computed). Worked example for 2026, single filer with modified adjusted gross income of $85,000 (invented, for the computation): the excess over $80,000 is $85,000 minus $80,000, or $5,000 (computed). The ratio is $5,000 divided by $10,000, or 0.5 (computed). The American Opportunity credit is $2,500 times (1 minus 0.5), or $1,250, and the Lifetime Learning credit is $2,000 times (1 minus 0.5), or $1,000 (computed).
Why the range does not move with inflation
The Code’s own amendment notes record what happened to the old inflation adjustment: “struck out subsec. (h) which related to inflation adjustments for the Lifetime Learning Credit for taxable years beginning after 2001.” Subsection (d) now carries the fixed $80,000 and $160,000 starting points shown above. Rev. Proc. 2025-32, which lists the 2026 inflation-adjusted items section by section, has no entry for section 25A. Compare an item that does move: for 2026 the student loan interest deduction “begins to phase out under § 221(b)(2)(B), as adjusted for inflation, for taxpayers with modified adjusted gross income in excess of $85,000 ($175,000 for joint returns)”. The education credit range for 2027 is not stated on this page; that year is on the education credits for 2027.
New for 2026: Social Security numbers
Public Law 119-21 rewrote the identification rule in section 25A(g)(1): “No credit shall be allowed under subsection (a) to an individual unless the individual includes on the return of tax for the taxable year” the individual’s social security number, and for another student, that student’s name and number. For the American Opportunity credit the Act adds that no credit “shall be allowed under this section unless the taxpayer includes the employer identification number of any institution to which the taxpayer paid qualified tuition and related expenses”. On timing: “The amendments made by this section shall apply to taxable years beginning after December 31, 2025.” The worksheets are on the American Opportunity credit MAGI worksheet and the Lifetime Learning credit MAGI worksheet.
Common mistakes
- Adding the two credits’ phase-outs together. Both credits are reduced by the same ratio against the same range, so a filer at $85,000 loses half of each, not half of one and then half of the other.
- Expecting the $80,000 range to rise in 2026. The statute states it in fixed dollars; the loan interest deduction is the one that is indexed ($85,000 for 2026). See the student loan interest deduction.
- Filing without a Social Security number for the student. For 2026 the statute requires the individual’s number, and for a student other than the taxpayer or spouse, that student’s name and number.
Related: the American Opportunity credit MAGI worksheet, the Lifetime Learning credit MAGI worksheet, Schedule 3 line 3 for education credits, and the education credits for 2027.
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Answer againSources
- 26 U.S.C. 25A, American Opportunity and Lifetime Learning credits (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
- Public Law 119-21 (One Big Beautiful Bill Act), July 4, 2025, enacted text (U.S. Government Publishing Office): www.govinfo.gov
- Internal Revenue Service, Rev. Proc. 2025-32, tax year 2026 inflation-adjusted amounts, as modified by the One, Big, Beautiful Bill Act: www.irs.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.