Estimated Federal Income Tax Benefit from the American 

Opportunity Tax Credit, Lifetime Learning Tax Credit, and 

the Student Loan Interest Deduction

For Taxable Year 2023

Office of Tax Analysis

May 12, 2022

Deena Ackerman

Michael Cooper
Current Law 2023

1

In taxable year 2023, taxpayers with current education expenses for themselves or a dependent 

may be eligible for one of two education credits. Taxpayers who make student loan payments

may be eligible to deduct interest paid.

The American opportunity tax credit (AOTC) is available for up to four taxable years for 

students enrolled at least half-time who are pursuing a degree or credential. The AOTC has a 

maximum value of $2,500 per student per year (up to $10,000 in tax relief over four years). The 

credit provides a 100 percent match for the first $2,000 of eligible expenses and a 25 percent 

match for the next $2,000 of eligible expenses. Forty percent of the resulting credit, thus a 

maximum of $1,000, is refundable and available to all taxpayers with expenses regardless of tax 

liability. The remaining 60 percent is nonrefundable.

In contrast, the lifetime learning tax credit (LLTC) is available for an unlimited number of 

years of education and does not require that the qualifying students be pursuing a degree or 

credential. The LLTC has a maximum value of $2,000 per tax return. It is calculated as a 20 

percent match of up to $10,000 of expenses per return. Unlike the AOTC, it is nonrefundable and 

therefore it is not available to many low-income families.

Both credits phase out for taxpayers with modified adjusted gross income between $80,000 and 

$90,000 (between $160,000 and $180,000 for joint filers).1 Only education spending net of other 

tax-preferred education assistance, such as grants, scholarships, or distributions from education 

savings accounts, qualifies for a credit. Qualifying expenses do not include living expenses, such 

as room and board. Taxpayers may claim at most one education tax credit per student per year.

The definition of eligible expenses differs between the two credits. Tuition and required fees are 

eligible expenses for either credit. The AOTC allows taxpayers to claim expenses for books and 

equipment (including books purchased at a bookstore) necessary for the course. The LLTC is 

more restrictive; taxpayers may only claim expenses for books and equipment required for 

enrollment (and purchased through the school as a condition of enrollment). 

Taxpayers can claim the credits for their own expenses or the expenses of a dependent child or 

relative. Although in general a dependent child must be less than 19 years old, the age limit is 

extended through 23 years old for full-time students.

2 Thus in general, the education expenses of 

traditional college students can be claimed by their parents.

Taxpayers may be eligible for a student loan interest deduction (SLID). Subject to income 

limitations, taxpayers may deduct up to $2,500 of qualified student loan interest paid. In 2022 the 

deduction phases out with modified AGI between $75,000 and $90,000 ($150,000 and $180,000 

for joint returns). The income limits are indexed for inflation. A deduction lowers the amount of

1 For tax years prior to 2021, the phaseout range for the LLTC was lower than that for the AOTC, and a deduction 

for tuition and fees was available. The Consolidated Appropriations Act of 2021 repealed the deduction for tuition 

and fees (which had expired) and increased the phaseout range for the LLTC. 2 The tax code defines a full-time student as a student who attends full-time for at least one day in each of five 

months, which is roughly one school term during the year. Schools set forth their definitions of full-time attendance 

as outlined in the Higher Education Act.
Current Law 2023

2

taxable income the taxpayer has; the deduction’s tax value is generally equal to the taxpayer’s 

marginal tax rate multiplied by the deducted amount. 

This document presents tables that show the Federal income tax support families are estimated to 

receive from these provisions for 2023. The estimates do not include dependent filers, and they 

ignore changes in tax of less than $5. Benefits are estimated using Treasury’s Individual Tax 

Model (ITM). The ITM takes a stratified random sample of tax returns from a base year, 

forecasts the values of line items on the tax returns for 2023 and applies a very detailed tax 

calculator to analyze how changes in the tax system affect tax liability. The first table shows the 

combined benefit from the two credits and the deduction; subsequent tables address the credits 

and the deduction separately. Results are shown for tax units, which consist of all individuals on 

a given tax return. In some cases, membership in a tax unit is identical to the household or 

family, but in other cases membership will differ.

The tables answer the following questions: “how many tax units benefit from the provision(s), 

what is the total amount of benefit, and what is the average benefit per return?” Tax units are 

classified based on current law adjusted gross income. The amount of benefit is calculated by 

comparing estimated tax liability to what estimated tax liability would be in the absence of the 

provision (but with the law otherwise unchanged). For example, in absence of the AOTC, many 

current claimants would switch to the LLTC, thereby offsetting some of the increase in tax. A tax 

unit is considered to benefit if the increase to income tax liability exceeds $5 when the benefit 

(or combination of benefits) is repealed. Because a deducted amount does not equal the tax

amount of benefit from that deduction, the student loan interest deduction table also includes 

average claims for the tax units benefitting.3

3 The tax benefit of a deduction is generally the value of the deducted amount multiplied by the taxpayer’s marginal 

tax rate. However, because a deduction could affect the income concept used for the calculation of other tax 

provisions, the net effect might be larger or smaller.
Current Law 2023

3

Table 1

Estimated Benefit from

the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit (LLTC), 

and the Student Loan Interest Deduction (SLID)

Taxable Year 2023

Adjusted Tax Units Total Average

Gross Benefitting Benefit Benefit

Income (Thousands) ($Millions) ($)

0 to < 15,000 2,325 1,860 800

15,000 to < 30,000 3,183 2,828 888

30,000 to < 40,000 2,250 1,905 847

40,000 to < 50,000 2,265 1,930 852

50,000 to < 60,000 1,807 1,380 764

60,000 to < 75,000 2,492 1,988 798

75,000 to < 100,000 2,626 2,367 901

100,000 to < 200,000 4,946 5,523 1,117

200,000 and over 0 0 0

Total1 21,971 19,853 904

Office of Tax Analysis May 09, 2022

1 Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are 

included among the tax units benefitting. Returns with negative income are excluded from the lowest 

income class but included in the total line. 
Current Law 2023

4

Table 2

Estimated Benefit from

the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLTC)

Taxable Year 2023

Adjusted Tax Units Total Average

Gross Benefitting Benefit Benefit

Income (Thousands) ($Millions) ($)

0 to < 15,000 2,189 1,844 842

15,000 to < 30,000 2,523 2,710 1,074

30,000 to < 40,000 1,320 1,735 1,314

40,000 to < 50,000 1,136 1,704 1,500

50,000 to < 60,000 747 1,134 1,517

60,000 to < 75,000 1,019 1,537 1,509

75,000 to < 100,000 1,240 2,086 1,681

100,000 to < 200,000 2,602 4,770 1,834

200,000 and over 0 0 0

Total1 12,848 17,591 1,369

Office of Tax Analysis Apr 22, 2022

1 Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are 

included among the tax units benefitting. Returns with negative income are excluded from the lowest 

income class but included in the total line. 
Current Law 2023

5

Table 3

Estimated Benefit from

the Lifetime Learning Tax Credit (LLTC)

Taxable Year 2023

Adjusted Tax Units Total Average

Gross Benefitting1 Benefit Benefit2

Income (Thousands) ($Millions) ($)

0 to < 15,000 56 6 108

15,000 to < 30,000 643 335 521

30,000 to < 40,000 482 357 740

40,000 to < 50,000 439 370 843

50,000 to < 60,000 345 310 898

60,000 to < 75,000 537 464 864

75,000 to < 100,000 581 472 813

100,000 to < 200,000 1,067 886 830

200,000 and over 0 0 0

Total3 4,149 3,200 771

Office of Tax Analysis Apr 22, 2022

1 Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are 

included among the tax units benefitting. 

2 Much of the drop in the average benefit for returns with AGI between $75,000 and $100,000 relative to 

returns in the next higher AGI category is due to the phaseout of the credit for unmarried taxpayers in this 

range.

3 Returns with negative income are excluded from the lowest income class but included in the total line. 
Current Law 2023

6

Table 4

Estimated Benefit from

the American Opportunity Tax Credit (AOTC)

Taxable Year 2023

Adjusted Tax Units Total Average

Gross Benefitting1 Benefit2 Benefit

Income (Thousands) ($Millions) ($)

0 to < 15,000 2,133 1,826 856

15,000 to < 30,000 1,880 1,766 940

30,000 to < 40,000 839 860 1,025

40,000 to < 50,000 706 804 1,138

50,000 to < 60,000 411 482 1,174

60,000 to < 75,000 502 601 1,196

75,000 to < 100,000 712 877 1,231

100,000 to < 200,000 1,684 1,974 1,172

200,000 and over 0 0 0

Total3 8,937 9,260 1,036

Office of Tax Analysis Apr 22, 2022

1 Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included 

among the tax units benefitting. 

2 Although the 8.9 million tax units claiming an AOTC claim 14.7 million of AOTC, in absence of the AOTC 

many would switch to the LLTC, thereby offsetting the potential tax increase.

3 Returns with negative income are excluded from the lowest income class but included in the total line. 
Current Law 2023

7

Table 5

Estimated Benefit from

Refundability of American Opportunity Tax Credit (AOTC)

Taxable Year 2023

Adjusted Tax Units Total Average

Gross Benefitting1 Benefit2 Benefit

Income (Thousands) ($Millions) ($)

0 to < 15,000 2,129 1,824 857

15,000 to < 30,000 1,738 1,518 873

30,000 to < 40,000 556 396 712

40,000 to < 50,000 306 250 817

50,000 to < 60,000 120 101 843

60,000 to < 75,000 63 58 933

75,000 to < 100,000 41 39 967

100,000 to < 200,000 16 17 1,036

200,000 and over 0 0 0

Total3 5,039 4,272 848

Office of Tax Analysis Apr 22, 2022

1 Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included 

among the tax units benefitting; all returns, regardless of the level of benefit, are included among tax units with 

claims. 

2 Even though all 8.9 million tax units claiming an AOTC claim the 40 percent of the credit that is refundable, 

only those with insufficient tax liability to offset their full credit benefit from this refundability. Tax units with 

sufficient tax liability would receive their full credit even without refundability; they are therefore not included 

among the 5.0 million units benefiting from refundability.

3 Returns with negative income are excluded from the lowest income class but included in the total line. 
Current Law 2023

8

Table 6

Estimated Claims and Benefits from

the Student Loan Interest Deduction (SLID)

Taxable Year 2023

Adjusted Tax Units Total Average Average

Gross Benefitting1 Benefit Interest Claimed Benefit2

Income (Thousands) ($Millions) ($) ($)

0 to < 15,000 134 14 1,371 101

15,000 to < 30,000 769 106 1,147 138

30,000 to < 40,000 1,100 167 1,168 152

40,000 to < 50,000 1,334 223 1,333 167

50,000 to < 60,000 1,220 246 1,384 201

60,000 to < 75,000 1,720 450 1,391 262

75,000 to < 100,000 1,698 283 1,137 167

100,000 to < 200,000 3,039 762 1,284 251

200,000 and over 0 0 0

Total3 11,021 2,253 1,275 204

Office of Tax Analysis Apr 25, 2022

1 Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included 

among the tax units in this table. Average claims are restricted to those units receiving a benefit even though 

there are units that may have claimed the deduction even if no Federal tax benefit resulted.

2 The decrease in the average benefit observed for tax units with AGI between $75,000 and $100,000 is largely 

due to the phaseout of the deduction for unmarried taxpayers in this income range.

3 Returns with negative income are excluded from the lowest income class but included in the total line.