2016 American Opportunity Credit
For 2016, the American Opportunity Credit figures are $2,500 (Maximum credit), $2,000 (Expenses credited in full), $2,000 (Further expenses credited in part) and 3 more figures below.
Effective 2016-01-01Source: Publication 970 (2016), Tax Benefits for Education (IRS)Verified 2026-09-03
Who it applies to
Taxpayers who pay qualified education expenses for an eligible student in 2016 and claim the American Opportunity Credit.
What changed this year, and why
The 2016 American Opportunity Credit is a tax credit for qualified education expenses paid for an eligible student. The first $2,000 of qualified education expenses is credited in full, and a further $2,000 of expenses is credited at a rate of 25%. The maximum credit is $2,500 per eligible student.
Common questions
- How is the American Opportunity Credit calculated?
- What is the maximum American Opportunity Credit for 2016?
Every amount on this page is a published figure rather than yours. The American Opportunity Credit calculator takes the number you enter and works it out against them, showing which published figure it used.
40% of the credit is refundable, the rest only offsets tax
Under the 2016 American Opportunity Credit, 40% of the credit is refundable, while the rest is nonrefundable. This means that if the credit exceeds your total federal tax liability for the year, up to 40% of the calculated credit can be paid to you as a refund even if you owe no tax. The nonrefundable portion can only be used to offset income tax you actually owe; it cannot generate a refund on its own. The credit equals the full amount of the first $2,000 of qualified education expenses plus 25% of the next $2,000 of such expenses, for a maximum of $2,500 per eligible student. Of that $2,500 maximum, 40% may be refundable. Therefore, a taxpayer with zero tax liability could still receive a refund of up to 40% of their credit, while the rest would be lost if there were no tax to offset. Eligibility is limited to students in their first four years of postsecondary education, and the credit may be claimed for no more than four tax years per student.
40% of credit may be refundable; the rest is nonrefundable
Publication 970 (2016), Tax Benefits for Education (IRS)
The income at which you lose the credit entirely
For the 2016 American Opportunity Credit, you cannot claim the credit if your modified adjusted gross income (MAGI) reaches certain thresholds. The credit phases out gradually when MAGI is between $80,000 and $90,000 for single filers, or between $160,000 and $180,000 for married couples filing jointly. Once MAGI reaches $90,000 for single filers or $180,000 for joint filers, the credit is completely eliminated and you cannot claim any amount. These income limits apply regardless of how much you paid in qualified education expenses or how many eligible students you have. The phase-out ensures that higher-income taxpayers do not receive the benefit, targeting the credit to those with moderate or lower incomes who need financial assistance with education costs.
The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint re- turn). You can't claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).
Publication 970 (2016), Tax Benefits for Education (IRS)
The same student can be claimed in only four tax years
The same student can only be claimed for the American Opportunity Credit in a maximum of four tax years. This means if the student had expenses that were used to figure the credit in any four earlier tax years, no additional credit can be claimed for that student in 2016 or any future year. This four-year limit includes any tax years in which the Hope scholarship credit was claimed for the same student, since the American Opportunity Credit replaced the Hope credit. Once a student has been claimed for the credit in four prior tax years, they are permanently ineligible for this credit regardless of whether they are still in school or have other qualifying expenses.
The student didn't have expenses that were used to figure an American opportunity credit in any 4 earlier tax years.
Publication 970 (2016), Tax Benefits for Education (IRS)
What counts as having finished the first four years
To qualify for the American Opportunity Credit, the student must not have completed the first four years of postsecondary education before 2016. This generally means the freshman through senior years of college, as determined by the eligible educational institution. The determination is made by the college or university, not by the number of credits earned or years actually attended. Academic credit awarded solely because of the student's performance on proficiency examinations is not counted toward completing these four years. Once a student has finished the first four years of postsecondary education, they are no longer eligible for this credit even if they are pursuing additional degrees or certificates.
The student hadn't completed the first 4 years of post- secondary education (generally, the freshman, sopho- more, junior, and senior years of college) before 2016.
Publication 970 (2016), Tax Benefits for Education (IRS)
Half-time enrollment in a degree program is required
For the American Opportunity Credit, the student must be enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential for at least one academic period beginning in 2016. If qualified expenses were paid in 2016, the academic period can begin in the first three months of 2017. Half-time enrollment means the student was taking at least half the normal full-time workload for their course of study, as determined by each eligible educational institution. This requirement applies even if the student is only claiming the credit for expenses paid during a period when they were not enrolled, as long as they met the half-time standard for at least one academic period during the year.
For at least one academic period beginning in 2016 (or the first 3 months of 2017 if the qualified expenses were paid in 2016), the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
Publication 970 (2016), Tax Benefits for Education (IRS)
A felony drug conviction disqualifies the student
A student cannot qualify for the American Opportunity Credit if they have been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2016. This disqualification applies regardless of when the conviction occurred, as long as it was before the end of the tax year. The restriction applies to both possession and distribution of controlled substances under federal or state law. If a student has such a felony conviction, no American Opportunity Credit can be claimed for that student even if all other eligibility requirements are met, including the income limits, the four-year limit, the first-four-years requirement, and the half-time enrollment standard.
The student hasn't been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2016.
Publication 970 (2016), Tax Benefits for Education (IRS)
Pay in December for a term that starts by March, and it counts in the earlier year
For 2016, the IRS treats an academic period that begins in January, February, or March of 2017 as if it began in 2016, provided the qualified education expenses for that period were paid in 2016. This means that if you pay tuition in December 2016 for a spring semester that starts in January 2017, you can count those expenses toward your 2016 American Opportunity Credit. The rule applies only when the term starts within the first three months of the following year and the payment was made in the earlier year. This timing rule helps taxpayers capture credits for prepaid spring semester expenses in the year they were paid rather than waiting until the year the classes actually begin.
For 2016, treat an academic period beginning in the first 3 months of 2017 as if it began in 2016 if qualified education expenses for the student were paid in 2016 for that academic period.
Publication 970 (2016), Tax Benefits for Education (IRS)
You can claim it for one student and the lifetime learning credit for another in the same year
For 2016, if you pay qualified education expenses for more than one student in the same year, you can choose to claim education credits on a per-student, per-year basis. This means you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for a different student in the same year. The two credits cannot both be claimed for the same student's expenses, but each credit can be applied to a different student's expenses. This flexibility allows families to maximize their education tax benefits by choosing the most advantageous credit for each student. The American Opportunity Credit is worth up to $2,500 per eligible student, calculated as the full amount of the first $2,000 in qualified education expenses plus 25% of the next $2,000.
If you pay qualified education expenses for more than one student in the same year, you can choose to claim certain credits on a per-student, per-year basis. This means that, for example, you can claim the American op- portunity credit for one student and the lifetime learning credit for another student in the same year.
Publication 970 (2016), Tax Benefits for Education (IRS)
Claim it when you are not eligible, and you can be banned for years
For the 2016 American Opportunity Credit, if you claim the credit even though you are not eligible, you may be banned from claiming the credit for up to 10 years. This penalty applies when a taxpayer claims the credit without meeting all the eligibility requirements, such as having paid qualified education expenses for an eligible student, or when the student has already been claimed for the credit in four prior tax years. The ban means you cannot claim the American Opportunity Credit on any return during the disqualification period. This rule is designed to prevent improper claims and ensure that only eligible taxpayers receive the credit, which is worth up to $2,500 per eligible student.
If you claim the American opportunity credit even though you're not eligible, you may be banned from claiming the credit for up to 10 years.
Publication 970 (2016), Tax Benefits for Education (IRS)
Filing separately from your spouse blocks the credit entirely
If your filing status is married filing separately on your 2016 tax return, you cannot claim the American Opportunity Credit at all. This is a complete bar to the credit - it does not reduce the amount or phase it out; it makes you ineligible no matter what your income or education expenses are. The IRS lists this as one of several conditions that disqualify a taxpayer from the credit entirely. Even if you paid qualified education expenses for an eligible student and your expenses would otherwise support a credit, the married-filing-separately status prevents any claim. This rule applies specifically to the American Opportunity Credit for the 2016 tax year; other education credits, such as the lifetime learning credit, have their own separate eligibility rules, though they also block married-filing-separately taxpayers. If you are married and wish to claim the credit, you would need to file a joint return with your spouse to remain eligible.
You can't claim the American opportunity credit for 2016 if any of the following apply. Your filing status is married filing separately.
Publication 970 (2016), Tax Benefits for Education (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 970 (2016), Tax Benefits for Education (IRS)
- Maximum credit
Maximum credit Up to $2,500 credit per eligible student
- Expenses credited in full
100% of the first $2,000 of qualified education expen- ses you paid for the eligible student
- Further expenses credited in part
25% of the next $2,000 of qualified education expen- ses you paid for that student
- Rate on the further expenses
25% of the next $2,000 of qualified education expen- ses you paid for that student
- MAGI limit, single filers
Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er)
- MAGI limit, joint filers
Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er)