The American Recovery and Reinvestment Act of 2009 just passed the House and Senate. A summary from the Ways and Means Committee with regards to the American Opportunity Education Tax Credit:
“American Opportunity” Education Tax Credit. The bill would provide financial assistance for individuals seeking a college education. For 2009 and 2010, the bill would provide taxpayers with a new “American Opportunity” tax credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year. Under this new tax credit, taxpayers will receive a tax credit based on one hundred percent (100%) of the first $2,000 of tuition and related expenses (including books) paid during the taxable year and twenty-five percent (25%) of the next $2,000 of tuition and related expenses paid during the taxable year. Forty percent (40%) of the credit
would be refundable. This tax credit will be subject to a phase-out for taxpayers with adjusted
gross income in excess of $80,000 ($160,000 for married couples filing jointly). This proposal is estimated to cost $13.907 billion over 10 years.
Congressman Fattah (D-PA) details the impact of the stimulus package on this press release:
“This legislation provides a significant down payment on the concepts contained in H.R. 106, the American Opportunity Tax Credit Act of 2009, which I introduced on the first day of the new Congress. Modeled after President Obama’s campaign pledge of college education for all, the package will provide $2,500 refundable tax credits for college tuition for young people from low income families who might otherwise miss this opportunity to improve their prospects in the work force. This tax credit is partially refundable – a critical provision for low-income students. The Stimulus also directs the Treasury Department to study the feasibility of requiring 100 hours of community service in exchange for the tax credit.