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

Since 2009, the American Opportunity Tax Credit has helped students seekinghigher education after high school. Originally authored by CongressmanDoggett and enacted as part of the 2009 Recovery Act, the American OpportunityTax 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 2013would implement President Obama's proposal in a cost-effective and efficientmanner, while also simplifying the tax code and making the credit work betterfor students who receive Pell Grants.

Thisnew legislation makes the American Opportunity Tax Credit permanent, with acost-of-living adjustment for inflation, while also simplifying andstreamlining the tax code. The permanent American Opportunity Tax Creditis a partially refundable tax credit of $2,500 for tuition, fees, and coursematerials for higher education. The credit is available forstudents who are enrolled both more than and less than half-time, though thecredit is calculated in different ways for the two situations. There isno limit on the number of years that the credit may be claimed, but there is alifetime limit of $15,000 per student. This legislation also improves thelaw by fixing an inconsistency in the code that currently disadvantagesstudents who receive Pell Grants by allowing the American Opportunity TaxCredit to count toward education costs that Pell Grants do not cover.

"This legislation makes permanent an important incentive for highereducation and streamlines the tax code, replacing three higher education taxcredits and a tax deduction with a single, unified tax credit to benefitall. This improved American Opportunity Tax Credit will be easier forfamilies to claim. And for the first time, it will help students whoreceive Pell Grants cover their unmet college expenses," said Rep. Doggett.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office">