Updated: Mar 24, 2021
To help determine if you are eligible for education tax credits or deductions, please visit the IRS's Interactive Tax Assistant.
This is general overview of the education tax credits and deductions offered by the Internal Revenue Service (IRS) and not intended to be tax, financial or legal advice. We encourage you to consult a tax professional to determine if you qualify for any credits or deductions. Discover Student Loans is not associated with the IRS.
There are two tax credits available to help pay for college: the American opportunity tax credit (formerly the Hope Credit) or lifetime learning credit. There are income limits that affect eligibility. You can use the credit for qualified education expenses as defined by the IRS.
Use this chart to compare some of the differences between the credits side by side. Visit irs.gov for full details.
|American Opportunity Tax Credit (AOTC)
||Lifetime Learning Credit (LLC)
|The credit can be applied to the first four years of college, up to $2,500 annually per eligible student. It can also be used for books, supplies and equipment.
||The credit can be applied to all years of college and/or courses for job skills, up to $2,000 annually.
|May not claim the AOTC or former Hope Credit for more than four tax years.
||No limit on the number of years you can claim the credit.|
|Student must be pursuing a degree or other recognized education credential at an eligible institution.
||Student must be taking a course/courses to get a degree or other recognized education credential or to get/improve job skills.
|Student must be enrolled at least half-time for one academic period that begins during the tax year.
||Student does not have to be enrolled at least half-time. The credit is available for one or more courses.
The Student Loan Interest Deduction lets you deduct the interest you paid on qualifying student loans for yourself, your spouse or your dependent when you took out the loan. You can deduct up to $2,500 of interest paid annually, which is gradually reduced and phased out based on income limits.
Please also see IRS Publication 970 for more information or call the IRS at 1-800-829-1040 (TTY 1-800-829-4059).