AOTC vs LLC: Which Education Credit is Better for You?

The IRS offers two different coupons for college tuition. You can only pick one per student. One gives you more money, but the other lasts forever. Here is how to choose the winner.

BMT Tax Research Team BMT Tax Research Team · 📅 Jan 2026 · ⏱️ 5 min read · TAX TIPS › COMPARISON
AOTC
$2,500
Best for UndergradWinner
LLC
$2,000
Best for Grad SchoolGood
Rule
Pick 1
Can’t Double DipFact

Head-to-Head Battle

Think of AOTC as a sprint (fast and rich) and LLC as a marathon (slow and steady).

Feature AOTC (VIP) LLC (Standard)
Max Value $2,500 $2,000
Refundable? Yes (40%) No (0%)
Limit 4 Years Only Unlimited Years
Workload Half-Time+ Even 1 Class
Target Undergrad Grad / Skills
What about Felonies?
Weird Rule: You cannot claim the AOTC if you have a felony drug conviction. However, the LLC has no such rule. Even with a record, you can claim the Lifetime Learning Credit.
Which One Fits You?
Freshman / Junior Use AOTC
Maximize the refund.
Masters / PhD Use LLC
AOTC is expired.
Night Class (1 Course) Use LLC
For career improvement.
GoalPick
Get Cash BackAOTC
UpskillingLLC

The Calculation is Different

AOTC Math (Better)

It covers 100% of the first $2,000 you spend, plus 25% of the next $2,000.
Spend $4,000 → Get $2,500 credit.

LLC Math (Worse)

It covers a flat 20% of the first $10,000 you spend.
Spend $4,000 → Get $800 credit.
(To get the max $2,000 LLC credit, you must spend $10,000 in tuition).

Pro Tip: Family Strategy

You can’t claim both credits for the same student in the same year. But…

Mixing and Matching

If you have two kids in college, you can mix them!
Child A (Freshman): Claim AOTC ($2,500).
Child B (Grad Student): Claim LLC ($2,000).
Total Benefit: $4,500 tax reduction.

Frequently Asked Questions

Can I claim books?
AOTC: Yes. Even books bought from Amazon count.
LLC: No. Only books required to be purchased directly from the university count.
Is there an income limit?
Yes. Both credits phase out for high earners.
AOTC starts phasing out at $80k (Single) / $160k (Married).
LLC starts phasing out at roughly the same levels (adjusted annually for inflation).