What is the maximum tax credit available under the American Opportunity Credit?

The American Opportunity Credit provides a tax benefit for qualified education expenses incurred for eligible students during their first four years of higher education. The maximum tax credit available under this program is $2,500 per eligible student. This credit can be applied to tuition, fees, and course materials required for enrollment, making it a significant financial relief for students and their families.

One notable feature of the American Opportunity Credit is that it is partially refundable, meaning that if the credit amount exceeds the amount of taxes owed, a portion of the excess credit may be refunded to the taxpayer. This provides an added incentive for families to invest in higher education.

Understanding this credit and its limits is essential for accurately filing taxes and maximizing potential refunds or reductions in tax liabilities related to education costs.