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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.