American Opportunity Tax Credit

Written By:
Paul Tracy
Updated November 11, 2020

What is an American Opportunity Tax Credit?

The American Opportunity Tax Credit (formerly known as the Hope Tax Credit) is a tax credit available to college students or their parents to help pay for college expenses.

How Does an American Opportunity Tax Credit Work?

Eligible taxpayers can qualify for up to $2,500 under the American Opportunity Tax Credit. The credit can be used to offset secondary education tuition and certain qualifying expenses.

The full tax credit is available to individuals whose modified adjusted gross income (AGI) is less than $80,000 or married couples filing jointly with modified AGI of under $160,000. The credit is phased out for taxpayers with incomes above these levels.

Why Does an American Opportunity Tax Credit Matter?

College students and their parents have a number of tax credits available to them. Because federal programs are constantly changing, it is important to keep up-to-date by regularly checking the IRS's Tax Benefits for Education Information Center.