House Passes Student Tax Credit Simplification Bill
The bill, approved by the House and known as the Student and Family Tax Simplification Act, would consolidate the Hope Credit, the American Opportunity Tax Credit, the Lifetime Learning Credit, and the tuition deduction into a single, expanded American Opportunity Tax Credit.
The new AOTC, which would be permanent and partially refundable, would provide a 100 percent tax credit for the first $2,000 of eligible higher education expenses and a 25-percent tax credit for the next $2,000 of such expenses (for a maximum credit of $2,500).
The first $1,500 of the credit would be refundable, meaning that families could receive the benefit regardless of whether they have federal income tax liability. The credit would be available for up to four years of post-secondary education at qualifying four-year universities, community colleges, and trade and vocational schools. It would begin to phase out for families with incomes between $86,000 and $126,000 (half those amounts for single individuals) to ensure that the credit provides greater benefit and value to low- and middle-income families.
Original Story at Accounting Today