How this calculator works
Tax year: 2026, United States. The American Opportunity Tax Credit covers 100% of the first $2,000 of qualified expenses and 25% of the next $2,000, for a maximum of $2,500 per eligible student. The credit phases out evenly between $80,000 and $90,000 of modified adjusted gross income for single, head-of-household and surviving-spouse filers, and between $160,000 and $180,000 for joint filers. Married filing separately is ineligible. Forty per cent of the allowed credit is refundable, so it can produce a payment even when no tax is owed, and the remaining 60% offsets tax up to the liability you enter. The model assumes one eligible student, at least half-time enrolment in a degree or certificate programme, no felony drug conviction and expenses paid for the year. It leaves out other education credits and deductions, the lifetime learning credit, scholarship coordination, state tax and any credit recapture.
Formula
Credit before phase-out = min(expenses, 2,000) x 100% + min(max(0, expenses - 2,000), 2,000) x 25%, capped at $2,500. Phase-out share = (modified adjusted gross income - threshold) / (range), limited to 0 through 1, where the range is $80,000 to $90,000, or $160,000 to $180,000 for joint filers. Allowed credit = credit before phase-out x (1 - phase-out share). Refundable part = 40% of the allowed credit. Non-refundable part used = min(60% of the allowed credit, tax liability).
Worked example
Qualified expenses of $6,000 give the full $2,500 credit: $2,000 plus 25% of the next $2,000. A single filer with $85,000 of modified adjusted gross income is halfway through the phase-out, so the credit is $1,250. Of that, $500 is refundable and $750 offsets tax. With $3,000 of liability, the total credit used is $1,250.
Frequently asked questions
Which expenses qualify?
Tuition, fees and course materials required for enrolment, less grants and scholarships that are not taxed. Room, board, transport and medical costs do not qualify for this credit.
Can I claim it for more than four years?
No. The credit is limited to the first four years of post-secondary study and cannot be claimed after the fourth year. The lifetime learning credit may apply later, with a lower maximum and a different phase-out.
Does the refundable part depend on tax owed?
No. Up to 40% of the allowed credit can be refunded even when the tax liability is zero. The other 60% is limited by the tax liability available on the return.
Why is married filing separately excluded?
The law makes separate filers ineligible for this credit. A married couple must file jointly to claim it.