What this line means
The total American Opportunity Tax Credit before income phase-outs. This is the sum of tentative AOTC amounts from Part III (line 27) for each eligible student. The maximum AOTC per student is $2,500 — 100% of the first $2,000 in qualified expenses plus 25% of the next $2,000. 1 This line is the starting point. Income limitations in Part II reduce this amount before it splits into a refundable portion (40%) and a nonrefundable portion (60%).
Does this apply to you?
- You paid tuition, enrollment fees, or required course materials for a student in the first four years of postsecondary education
- The student is enrolled at least half-time in a program leading to a degree or recognized credential
- The student has not completed four years of higher education before 2025
- You have not claimed the AOTC for the same student in four or more prior tax years
- Your modified AGI is below $90,000 (single) or $180,000 (married filing jointly) 2
Easy to overlook
Course materials count toward the AOTC — not just tuition Unlike the Lifetime Learning Credit, the AOTC includes required books, supplies, and equipment in qualified expenses. A student who pays $1,800 in tuition and $700 in required textbooks has $2,500 in qualified expenses — enough to claim the full $2,500 credit. Many filers enter only tuition from the 1098-T and leave money on the table. 3 IRS Publication 970 — Tax Benefits for Education
You can claim the AOTC for multiple students in the same year Each eligible student generates a separate credit of up to $2,500. A family with two children in college can claim up to $5,000 total on this line. The per-student calculation happens in Part III (line 27), and this line adds them together. 4 IRS Form 8863 instructions — Line 1
Watch out for this
The AOTC has a strict four-year limit per student. If you claimed the Hope Credit (the AOTC predecessor) or the AOTC in any four prior tax years for the same student, the credit is zero for that student — even if qualified expenses remain. The IRS tracks this across years and will reject claims that exceed the four-year cap. Also, the student must not have a felony drug conviction at the end of the tax year.
Footnotes
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IRS Form 8863 Instructions, Part III — Student and Education Institution Information. https://www.irs.gov/instructions/i8863 ↩
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IRS Publication 970, Tax Benefits for Education, Chapter 2 — American Opportunity Credit. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩
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IRS Publication 970, Tax Benefits for Education, Qualified Education Expenses. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩
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IRS Form 8863 Instructions, Line 1. https://www.irs.gov/instructions/i8863 ↩