Lifetime Learning Credit Income Limits Frozen

The Lifetime Learning Credit (LLC) can knock up to $2,000 off your tax bill for graduate school, a professional certificate, or a single class taken to sharpen job skills. Whether you get it, though, depends on an income test that doesn't move.

For 2025 and 2026, the Lifetime Learning Credit phases out as modified AGI rises from $80,000 to $90,000 for single, head-of-household, and qualifying surviving spouse filers, and from $160,000 to $180,000 for married couples filing jointly. Married people filing separately can't claim it. These limits are written into the tax code as fixed dollar amounts and aren't adjusted for inflation, according to IRS Publication 970.

Check where you land with the Lifetime Learning Credit calculator.

Lifetime Learning Credit income limits

You also can't claim it if someone else claims you as a dependent. In that case, the person who claims you can claim the credit for expenses you paid.

Why the limits are "frozen"

Before 2021, the LLC phased out at lower income levels that were indexed to inflation. The Consolidated Appropriations Act, 2021 replaced them with the American opportunity credit's higher, fixed thresholds starting with 2021 returns, and repealed the separate tuition and fees deduction at the same time. That raise helped many families right away, but because the new amounts aren't indexed, they stay put while wages and tuition rise.

Contrast that with the student loan interest deduction, which is indexed: its 2026 phase-out runs from $85,000 to $100,000 for single filers and $175,000 to $205,000 for joint filers under Rev. Proc. 2025-32, up from $85,000–$100,000 and $170,000–$200,000 for 2025. The education credits got no such bump. Each year a household's pay keeps pace with inflation, it moves a little closer to the LLC cutoff.

How much is the credit worth?

• 20% of the first $10,000 of qualified expenses, so a maximum of $2,000 per return, not per student.
• Nonrefundable: it can cut your income tax to zero, but any excess is lost.
• No limit on years: you can claim it every year you have qualifying costs.
• No enrollment minimum: one course counts, as long as it's at an eligible institution, one that can participate in federal student aid programs.

What counts as a qualified expense

• Tuition and fees required for enrollment or attendance.
• Books, supplies, and equipment only if they must be paid to the school as a condition of enrollment.
• Not room and board, insurance, transportation, or personal expenses, even if paid to the school.

You must subtract tax-free assistance from your expenses: scholarships and grants, employer-paid tuition, and the part of a 529 distribution used for the same costs. You can't use the same dollar twice.

How the phase-out works, with examples

The credit is reduced proportionally across the phase-out range:

Allowed credit = Tentative credit × (Upper limit − MAGI) ÷ Range

The range is $10,000 for single filers and $20,000 for joint filers.

Example 1: single filer, $6,000 of tuition, MAGI $84,000.

• Tentative credit: 20% × $6,000 = $1,200
• Fraction kept: ($90,000 − $84,000) ÷ $10,000 = 0.60
• Credit: $1,200 × 0.60 = $720

Example 2: married filing jointly, $15,000 of tuition, MAGI $170,000.

• Tentative credit: 20% × $10,000 (the cap) = $2,000
• Fraction kept: ($180,000 − $170,000) ÷ $20,000 = 0.50
• Credit: $1,000

Example 3: same couple at MAGI $181,000. Credit: $0.

In the phase-out range, every extra $1,000 of MAGI costs a single filer up to $200 of credit, and a joint filer up to $100.

What counts as MAGI for the LLC

For this credit, modified AGI is your adjusted gross income plus any foreign earned income or housing exclusion, and certain income excluded by residents of Puerto Rico and U.S. territories. For most people, it's simply AGI from Form 1040, line 11. The MAGI calculator shows the add-backs that apply to different tax breaks.

Ways to get under the limit

Because MAGI is mostly AGI, anything that lowers AGI helps.

Example: a single filer with MAGI of $92,000 and $6,000 of tuition gets no credit. If they raise 401(k) deferrals by $8,000 during the year:

• New MAGI: $84,000
• Credit: $720 (Example 1)
• Plus the income tax saved on the $8,000 deferral, about $1,760 in the 22% bracket

Moves that lower AGI:

• Pre-tax 401(k), 403(b), or 457(b) deferrals, up to $24,500 in 2026, plus catch-up contributions at 50 and older.
• HSA contributions, up to $4,400 for self-only coverage or $8,750 for family coverage in 2026. Payroll contributions also skip FICA. See the HSA calculator.
• Deductible traditional IRA contributions, up to $7,500, if you qualify for the deduction.
• The student loan interest deduction, up to $2,500.
• Self-employed retirement contributions such as a SEP or solo 401(k).

Timing helps too. Tuition paid in 2026 for an academic period starting in January through March 2027 counts for 2026, so a prepayment can move the expense into a year when your MAGI is lower.

Common situations, and who gets the credit

A teacher taking summer courses. A single teacher with $72,000 of MAGI pays $3,500 for two graduate courses. MAGI is under $80,000, so the credit is 20% × $3,500 = $700, as long as the employer or a grant didn't pay for them.

A parent paying for a graduate student. If you can claim your 23-year-old as a dependent (for example, a full-time student under 24 whom you support), you claim the LLC on your return, using your MAGI. If your MAGI is over the limit, the credit is lost. Not claiming the child as a dependent lets the student claim it on their own return using their income, but you lose the dependency-related benefits, so compare both returns.

A career changer paying for a certificate. A coding bootcamp or certificate program qualifies only if the provider is an eligible educational institution. Many standalone bootcamps aren't, so check whether the school issues Form 1098-T and participates in federal student aid.

A couple both in school. The $2,000 cap is per return. Two spouses each paying $10,000 of graduate tuition still get a maximum of $2,000 combined, and filing separately to get two credits isn't allowed.

LLC vs. American opportunity credit

If a student qualifies for both, the American opportunity credit is almost always larger. You can't claim both for the same student in the same year, but you can claim the AOTC for one child and the LLC for another (or for yourself). Compare them in the AOTC calculator or the side-by-side education tax credits calculator.

New for 2026: Social Security number requirement

Starting with 2026 returns, the person claiming the LLC or AOTC must have a Social Security number that's valid for work and issued before the return's due date. If you're claiming the credit for someone else's expenses, such as a dependent child, the student needs a valid SSN too. An ITIN won't qualify.

How to claim it

1. Get Form 1098-T from the school, usually by early February.
2. Reconcile it with what you actually paid during the calendar year; the 1098-T can differ from your real payments.
3. Subtract tax-free aid: scholarships, grants, employer assistance, and 529 money used for the same expenses.
4. Complete Form 8863: student and school details go on page 2, the LLC is figured in Part II, and the result carries to Schedule 3 (Form 1040).
5. Keep receipts for required fees and materials paid to the school.

Will the limits ever change?

Only Congress can index or raise them, and the 2025 tax law didn't. Plan on $80,000/$160,000 and $90,000/$180,000 staying in place. If you're paying for graduate school with loans, the student loan calculator covers the new 2026 repayment plans. For other year-to-year changes, see the 2026 IRS inflation adjustments guide. If you're saving for a child's future education, a 529 plan offers tax-free growth with no income limit; compare it with a custodial account in the 529 vs. UTMA calculator.