2020 American Opportunity Credit
For 2020, 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 2020-01-01Source: Publication 970 (2020), Tax Benefits for Education (IRS)Verified 2026-08-29
Compared with 2019
Every figure on this page is unchanged from 2019.
| Item | 2019 | 2020 | 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 during the 2020 tax year
What changed this year, and why
The American Opportunity Credit for 2020 allows a maximum credit of $2,500 per eligible student. The first $2,000 of qualified education expenses are credited in full, and 25% of the next $2,000 of qualified education expenses are credited, per eligible student.
Common questions
- How is the American Opportunity Credit calculated?
- The first $2,000 of qualified education expenses per eligible student are credited in full, and 25% of the next $2,000 is credited, for a maximum of $2,500 per eligible student.
40% of the credit is refundable, the rest only offsets tax
For the 2020 American Opportunity Credit, 40% of the credit may be refundable, while the rest is nonrefundable. A refundable portion means that if the credit exceeds your total tax liability, you can receive that share of the credit as a refund even if you owe no tax. The nonrefundable share can only reduce your tax bill to zero and cannot generate a refund beyond what you owe. The maximum credit is $2,500 per eligible student. The credit is computed by claiming the first $2,000 of qualified expenses in full and then applying a 25% rate to the next $2,000 of expenses. Taxpayers with little or no income tax liability can still benefit because the refundable portion reaches them as a cash payment. If you owe no tax at all, you may still receive the refundable share back.
Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable
Publication 970 (2020), Tax Benefits for Education (IRS)
The income at which you lose the credit entirely
For the 2020 American Opportunity Credit, your modified adjusted gross income (MAGI) must be below certain thresholds. If your MAGI is $90,000 or more as a single filer, head of household, or qualifying widow(er), or $180,000 or more if married filing jointly, you cannot claim the credit at all. These are the phaseout limits where the credit is reduced to zero. Between these amounts and lower thresholds, the credit phases out gradually. The credit itself 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 in expenses. Taxpayers whose income exceeds these limits lose the credit entirely, regardless of how much they spent on education. Married couples filing separately cannot claim the credit at any income level.
Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if married filing jointly).
Publication 970 (2020), Tax Benefits for Education (IRS)
The same student can be claimed in only four tax years
You cannot claim the American Opportunity Credit for the same student in more than four tax years. The student must not have had expenses that were used to figure the credit in any four earlier tax years. This means the credit is available for a maximum of four tax years per student over their entire educational career. Once the credit has been claimed for four prior tax years, the student no longer qualifies as an eligible student regardless of whether they are still pursuing their education. This limit applies even if the expenses were claimed by different taxpayers in different years, such as parents claiming the credit in some years and the student claiming it in others. The four-year limit is a lifetime cap tied to the individual student.
The student didn't have expenses that were used to figure an American opportunity credit in any 4 earlier tax years.
Publication 970 (2020), Tax Benefits for Education (IRS)
What counts as having finished the first four years
To claim the American Opportunity Credit, the student must not have completed the first four years of postsecondary education before the tax year. A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed before 2020. This determination is made by the eligible educational institution based on its own academic standards. Academic credit awarded solely because of the student's performance on proficiency examinations is not counted toward this four-year completion test. Generally, this means the credit is available for students in their freshman through senior years of college. Once a student has been classified as having completed four years, they are no longer an eligible student for the credit, even if they continue to take classes or pursue graduate-level work.
Completion of first 4 years. A student has completed the first 4 years of postsecondary education if the institu- tion at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2020.
Publication 970 (2020), Tax Benefits for Education (IRS)
Half-time enrollment in a degree program is required
The American Opportunity Credit requires that for at least one academic period beginning in 2020, the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Half-time enrollment is determined by the educational institution based on at least one-half the normal full-time workload for the student's course of study. Students enrolled less than half-time cannot qualify for this credit, though they may be eligible for the Lifetime Learning Credit. The program must lead to a recognized credential; general education courses without a degree or certificate objective do not qualify. The credit is worth up to $2,500 per eligible student, with the first $2,000 of qualified expenses credited in full and the next $2,000 credited at 25%.
the student was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential.
Publication 970 (2020), Tax Benefits for Education (IRS)
A felony drug conviction disqualifies the student
A student cannot qualify for the American Opportunity Credit if the student has been convicted of a federal or state felony for possessing or distributing a controlled substance as of the end of 2020. This disqualification applies regardless of when the conviction occurred. Even if the student meets all other requirements, including enrollment at least half-time in a degree program and not having completed four years of postsecondary education, a felony drug conviction makes the student ineligible for this credit. The student may still qualify for the Lifetime Learning Credit, which does not have this disqualification. 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 in expenses.
con- victed of a federal or state felony for possessing or distributing a controlled substance.
Publication 970 (2020), 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 (2020), 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