H.R. 3393 — what changed

“25A. American opportunity tax credit

changed “(a) In general—In the case of any individual for any taxable year, an individual, there shall be allowed as a credit against the tax imposed by this chapter for such the taxable year year, with respect to each eligible student, an amount equal to the sum of—

changed “(1) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to any the eligible student for whom an election is in effect under this section for such taxable year during any academic period beginning in such taxable year) as does not exceed $2,000, plus

changed “(2) 25 percent of so much of such expenses so paid as exceeds the dollar amount in effect under paragraph (1) but does not exceed twice such dollar amount.

changed “(b) Portion of credit refundable—So much of the credit allowable under subsection (a) with respect to each eligible student (determined without regard to this subsection and section 26(a) and after application of all other provisions of this section) as does not exceed $1,500 shall be treated as a credit allowable under subpart C (and not allowable under subsection (a)). this part). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom section 1(d) 1(g) applies for such taxable year.

“(c) Limitation based on modified adjusted gross income

“(1) In general—The amount allowable as a credit under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this subsection and subsection (b) but after application of all other provisions of this section) as—

“(A) the excess of—

“(i) the taxpayer’s modified adjusted gross income for such taxable year, over

changed “(ii) $43,000 $80,000 (twice such amount in the case of a joint return), bears to

changed “(B) $20,000 $10,000 (twice such amount in the case of a joint return).

changed “(2) Modified adjusted gross income—For purposes of this subsection, the term modified “modified adjusted gross income income” means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.

changed “(d) Other limitationslimitations—No credit shall be allowed under this section with respect to any eligible student for any taxable year if—

changed “(1) Credit such student was taken into account in determining the credit allowed only for 4 taxable years—An election to have under this section apply may not be made for any taxable year if such an election (by the taxpayer or any other individual) is in effect with respect to such student for any 4 prior taxable years.years, or

changed “(2) Credit allowed for year only if individual is at least 1/2 time such student for portion has completed (before the beginning of year—No credit shall be allowed under subsection (a) for a such taxable year with respect to year) the qualified tuition and related expenses first 4 years of an individual unless such individual is postsecondary education at an eligible student for at least one academic period which begins during such year.educational institution.

removed “(3) Credit allowed only for first 4 years of postsecondary education—No credit shall be allowed under subsection (a) for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution.

“(e) Definitions—For purposes of this section—

added “(1) Eligible student—The term “eligible student” means, with respect to any academic period, a student who—

removed “(1) Eligible student—The term eligible student means, with respect to any academic period, a student who—

“(A) meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on August 5, 1997, and

“(B) is carrying at least 1/2 the normal full-time work load for the course of study the student is pursuing.

“(2) Qualified tuition and related expenses

added “(A) In general—The term “qualified tuition and related expenses” means tuition, fees, and course materials, required for enrollment or attendance of—

removed “(A) In general—The term qualified tuition and related expenses means tuition, fees, and course materials, required for enrollment or attendance of—

“(i) the taxpayer,

“(ii) the taxpayer’s spouse, or

“(iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,

“(B) Exception for education involving sports, etc—Such term does not include expenses with respect to any course or other education involving sports, games, or hobbies, unless such course or other education is part of the individual’s degree program.

“(C) Exception for nonacademic fees—Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual's academic course of instruction.

added “(3) Eligible educational institution—The term “eligible educational institution” means an institution—

removed “(3) Eligible educational institution—The term eligible educational institution means an institution—

“(A) which is described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088), as in effect on August 5, 1997, and

“(B) which is eligible to participate in a program under title IV of such Act.

“(f) Special rules

“(1) Identification requirement—No credit shall be allowed under subsection (a) to a taxpayer with respect to the qualified tuition and related expenses of an individual unless the taxpayer includes the name and taxpayer identification number of such individual, and the employer identification number of any institution to which such expenses were paid, on the return of tax for the taxable year.

“(2) Adjustment for certain scholarships, etc

“(A) In general—The amount of qualified tuition and related expenses otherwise taken into account under subsection (a) with respect to an individual for an academic period shall be reduced (before the application of subsection (c)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as—

“(i) a qualified scholarship which is excludable from gross income under section 117,

“(ii) an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code, or under chapter 1606 of title 10, United States Code, and

added “(iii) a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such individual's educational expenses, or attributable to such individual's enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States.

changed “(iii) a payment “(B) Coordination with Pell Grants not used for qualified tuition and related expenses—For purposes of subparagraph (A), the amount of any Federal Pell Grant under section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) shall be reduced (but not below zero) by the amount of expenses (other than a gift, bequest, devise, or inheritance within qualified tuition and related expenses) which are taken into account in determining the meaning cost of attendance (as defined in section 102(a) for such individual's educational expenses, or attributable to 472 of the Higher Education Act of 1965, as in effect on the date of the enactment of this paragraph) of such individual's enrollment individual at an eligible educational institution, institution for the academic period for which is excludable from gross income under any law of the United States.credit under this section is being determined.

removed “(B) Coordination with Pell Grants not used for qualified tuition and related expenses—Any amount determined with respect to an individual under subparagraph (A) which is attributable to a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) shall be reduced (but not below zero) by the amount of expenses (other than qualified tuition and related expenses) which are taken into account in determining the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, as in effect on the date of the enactment of this paragraph) of such individual at an eligible educational institution for the academic period for which the credit under this section is being determined.

“(3) Treatment of expenses paid by dependent—If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins—

“(A) no credit shall be allowed under subsection (a) to such individual for such individual’s taxable year, and

“(B) qualified tuition and related expenses paid by such individual during such individual’s taxable year shall be treated for purposes of this section as paid by such other taxpayer.

“(4) Treatment of certain prepayments—If qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year.

“(5) Denial of double benefit—No credit shall be allowed under this section for any amount for which a deduction is allowed under any other provision of this chapter.

“(6) No credit for married individuals filing separate returns—If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year.

“(7) Nonresident aliens—If the taxpayer is a nonresident alien individual for any portion of the taxable year, this section shall apply only if such individual is treated as a resident alien of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.

“(g) Inflation adjustment

added “(1) In general—In the case of a taxable year beginning after 2018, the $2,000 amount in subsection (a)(1), the $1,500 amount in subsection (b), and the $80,000 amount in subsection (c)(1)(A)(ii) shall each be increased by an amount equal to—

removed “(1) In general—In the case of a taxable year beginning after 2018, the $2,000 amount in subsection (a)(1), the $1,500 amount in subsection (b), and the $43,000 amount in subsection (c)(1)(A)(ii) shall each be increased by an amount equal to—

“(A) such dollar amount, multiplied by

“(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2017” for “calendar year 1992” in subparagraph (B) thereof.

“(2) Rounding—If any amount as adjusted under paragraph (1) is not a multiple of $100 ($1,000 in the case of the amount in subsection (c)(1)(A)(ii)), such amount shall be rounded to the next lowest multiple of $100 ($1,000 in the case of the amount in subsection (c)(1)(A)(ii)).

“(h) Regulations—The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out this section, including regulations providing for a recapture of the credit allowed under this section in cases where there is a refund in a subsequent taxable year of any amount which was taken into account in determining the amount of such credit.”