American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) is a partially refundable tax credit of
up to $2,500 each year for out-of-pocket higher education expenses including course
materials, tuition, and fees for the first four years of college. However, students
and families need to keep a record of their expenses to be eligible.
AOTC At A Glance
- Tax credit up to $2,500 of out-of-pocket cost of tuition and related expenses including
course materials paid during the taxable year.
- Eligible for the first four years of college.
- 100% of the first $2,000 and 25% of the next $2,000.
- 40% of the credit is refundable with the maximum refundable amount of $1,000.
- Phase-out for taxpayers with adjusted gross income in excess of $80,000 or $160,000
for married couples filing jointly (AGI phase out limits are $90,000 individual, $180,000
married couples filing jointly).
- Helps an estimated 4 million additional students attend college than the previous
tax credit.
- $16.581 billion in total benefits for students and families in 2015.
- Over 10 million students and families claimed the AOTC in 2015 with an average benefit
of $1,645.