2017 American Opportunity Credit
For 2017, the American Opportunity Credit is $2,500 (Maximum credit), $2,000 (Expenses credited in full), $2,000 (Further expenses credited in part) and 25% (Rate on the further expenses).
Effective 2017-01-01Source: Publication 970 (2017), Tax Benefits for Education (IRS)Verified 2026-08-29
Compared with 2016
Every figure on this page is unchanged from 2016.
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Maximum credit | $2,500 | $2,500 | +$0 (+0.0%) |
| Expenses credited in full | $2,000 | $2,000 | +$0 (+0.0%) |
| Further expenses credited in part | $2,000 | $2,000 | +$0 (+0.0%) |
| Rate on the further expenses | 25% | 25% | +0% (+0.0%) |
Who it applies to
Taxpayers who pay qualified education expenses for an eligible student in the first four years of postsecondary education
What changed this year, and why
The American Opportunity Credit for 2017 allows a maximum credit of $2,500 per eligible student. The first $2,000 of qualified education expenses is credited in full, and the next $2,000 is credited at 25%. These amounts are unchanged from 2016.
Common questions
- How is the American Opportunity Credit calculated?
- The credit covers the first $2,000 of qualified education expenses in full, plus 25% of the next $2,000, for a maximum of $2,500 per eligible student.
40% of the credit is refundable, the rest only offsets tax
Under the 2017 American Opportunity Credit, 40% of the credit is refundable while the rest is nonrefundable. A refundable portion means that even if the credit exceeds the taxpayer's total tax liability, the IRS will pay out that share as a refund. The nonrefundable share can reduce tax owed to zero but any excess beyond that is forfeited. The maximum credit is $2,500 per eligible student, and the refundable share is calculated as 40% of whatever credit amount the taxpayer qualifies for after applying the phase-out rules. This refundable feature makes the credit accessible to lower-income taxpayers who may have little or no tax liability. To qualify, the student must meet all eligibility requirements including enrollment status, education level, and the absence of a felony drug conviction.
Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable
Publication 970 (2017), Tax Benefits for Education (IRS)
The income at which you lose the credit entirely
For the 2017 American Opportunity Credit, the income cutoff is $90,000 of modified adjusted gross income (MAGI) for single filers, head of household, or qualifying widow(er), and $180,000 for married filing jointly. If your MAGI equals or exceeds these amounts, you cannot claim the credit at all. The credit phases out gradually as income rises toward these thresholds, so taxpayers with MAGI below the cutoff may receive a reduced credit rather than the full amount. MAGI generally includes your adjusted gross income with certain modifications. Married taxpayers filing separately are completely ineligible for the credit regardless of income. The phase-out ensures that higher-income taxpayers receive little or no benefit from the credit while middle and lower-income families can claim the full $2,500 per eligible student if they meet all other requirements.
Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if married filing jointly). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit.
Publication 970 (2017), Tax Benefits for Education (IRS)
The same student can be claimed in only four tax years
The American Opportunity Credit can be claimed for the same student for a maximum of 4 tax years total. This count includes any earlier tax years in which the Hope scholarship credit was claimed for that student, since the Hope credit was the predecessor to the American Opportunity Credit. Once expenses have been used to figure the credit in 4 prior tax years, the student is no longer eligible for the American Opportunity Credit in any subsequent year, regardless of whether they are still enrolled in school or incurring qualified education expenses. The 4-year limit is measured per student, not per taxpayer, so if a parent claimed the credit for a dependent student for 4 years, neither the parent nor the student can claim it again for that same student. This limitation works alongside other eligibility requirements to restrict the credit to the early years of postsecondary education.
The student didn't have expenses that were used to figure an American opportunity credit in any 4 earlier tax years. This includes any tax year(s) in which you claimed the Hope scholarship credit for the same stu- dent.
Publication 970 (2017), Tax Benefits for Education (IRS)
What counts as having finished the first four years
The American Opportunity Credit is only available if the student has not completed the first four years of postsecondary education before the tax year. This generally corresponds to the freshman through senior years of college, as determined by the eligible educational institution. Academic credit earned solely through proficiency examinations is not counted toward determining whether the student has completed these four years. This requirement ensures the credit is targeted to students in their early undergraduate years. A student who has already earned four years of academic credit at their institution is not eligible, even if they have not yet received a degree. This rule works together with the four-tax-year limit to restrict the credit to the initial phase of postsecondary education.
1. As of the beginning of 2017, the student had not com- pleted the first 4 years of postsecondary education (generally, the freshman through senior years of col- lege), as determined by the eligible educational insti- tution. For this purpose, don't include academic credit awarded solely because of the student's performance on proficiency examinations.
Publication 970 (2017), Tax Benefits for Education (IRS)
Half-time enrollment in a degree program is required
To claim the American Opportunity Credit for 2017, the student must have been 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 2017 or the first three months of 2018. Half-time enrollment means the student is carrying at least half the normal full-time workload as defined by their educational institution. The program must lead to a recognized credential; courses taken for personal enrichment without a degree or certificate objective do not qualify. This requirement must be met in addition to the other eligibility criteria including the four-year education limit and the absence of a felony drug conviction. The half-time enrollment standard is less restrictive than full-time enrollment, allowing part-time students who meet this minimum threshold to qualify for the credit.
For at least one academic period beginning in 2017 (or the first 3 months of 2018 if the qualified expenses were paid in 2017), the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
Publication 970 (2017), Tax Benefits for Education (IRS)
A felony drug conviction disqualifies the student
To qualify for the American Opportunity Credit in 2017, the student must not have been convicted of a felony for possessing or distributing a controlled substance as of the end of 2017. This disqualification applies regardless of when the conviction occurred or whether the student has completed any sentence or probation. A felony drug conviction under either federal or state law permanently disqualifies the student from claiming the American Opportunity Credit for any tax year. This requirement is separate from the other eligibility rules regarding enrollment status, education level, and income limits. If the student has such a conviction, the taxpayer cannot claim the American Opportunity Credit for that student's qualified education expenses, though other education tax benefits such as the Lifetime Learning Credit may still be available if all their requirements are met. This rule ensures that the credit benefits only students who meet certain conduct standards.</quote> </function> </tool_call> Wait, I need to verify this quote occurs exactly once. Let me search. </think> <tool_call> <function=submitExplainer> <parameter=body> For 2017, the American Opportunity Credit is not available if the student has been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2017. This disqualification applies regardless of when the conviction occurred, whether the sentence has been completed, or whether probation or parole has been served. A single felony drug conviction permanently disqualifies the student from claiming this particular credit, though other education benefits such as the Lifetime Learning Credit may still be available. This requirement is one of the conditions that must be met along with the enrollment standard, the first-four-years rule, and the four-tax-year limit. The conviction can be under either federal law or state law. Even if the student is currently enrolled half-time in a degree program and meets all other requirements, the felony drug conviction bars the American Opportunity Credit.
The student hasn't been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2017.
Publication 970 (2017), 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 (2017), 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