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Rep. Doggett Introduces Permanent Extension of the American Opportunity Tax Credit

April 25, 2013

Since 2009, the American Opportunity Tax Credit has helped students seeking higher education after high school.  Originally authored by Congressman Doggett and enacted as part of the 2009 Recovery Act, the American Opportunity Tax Credit was extended through 2017 as part of the year-end budget deal.  In his Budget, President Obama has proposed making the credit permanent.  The American Opportunity Tax Credit Permanence and Consolidation Act of 2013 would implement President Obama’s proposal in a cost-effective and efficient manner, while also simplifying the tax code and making the credit work better for students who receive Pell Grants. 

This new legislation makes the American Opportunity Tax Credit permanent, with a cost-of-living adjustment for inflation, while also simplifying and streamlining the tax code.  The permanent American Opportunity Tax Credit is a partially refundable tax credit of $2,500 for tuition, fees, and course materials for higher education.   The credit is available for students who are enrolled both more than and less than half-time, though the credit is calculated in different ways for the two situations.  There is no limit on the number of years that the credit may be claimed, but there is a lifetime limit of $15,000 per student.  This legislation also improves the law by fixing an inconsistency in the code that currently disadvantages students who receive Pell Grants by allowing the American Opportunity Tax Credit to count toward education costs that Pell Grants do not cover. 

“This legislation makes permanent an important incentive for higher education and streamlines the tax code, replacing three higher education tax credits and a tax deduction with a single, unified tax credit to benefit all.  This improved American Opportunity Tax Credit will be easier for families to claim.  And for the first time, it will help students who receive Pell Grants cover their unmet college expenses,” said Rep. Doggett.
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