American Opportunity Tax Credit

The American Opportunity Tax Credit is a partially refundable tax credit detailed in Section 1004 of the American Recovery and Reinvestment Act of 2009.

The act specifies:

  1. Provisions are specific to tax years 2009 and 2010 (since extended through 2017) for the first 4 years of post-secondary education.
  2. Increases the Hope Scholarship Credit to 100 percent qualified tuition, fees and course materials paid by the taxpayer during the taxable year not to exceed $2,000, plus 25 percent of the next $2000 in qualified tuition, fees and course materials. The total credit does not exceed $2500.
  3. 40% of the credit is refundable.
  4. This tax credit is subject to a phase-out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly).

The act directs several Treasury studies:

  1. Coordination with non-tax student financial assistance;
  2. Coordinate the credit allowed under the Federal Pell Grant program to maximize their effectiveness at promoting college affordability;
  3. Examine ways to expedite the delivery of the tax credit;
  4. With the Secretary of Education, study the feasibility of requiring including community service as a condition of taking their tuition and related expenses into account.

Read more about American Opportunity Tax Credit:  History

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