More students and families received a higher-education tax credit in 2009 than in 2008, and the average credit was 75 percent higher than the previous year, according to a report out today by the U.S. Department of the Treasury.
The report compares the American Opportunity Tax Credit, created in the 2009 economic-stimulus bill, with its predecessor, the Hope tax credit. The new credit expires in 2010, but President Obama has proposed making it permanent, at a cost of $58-billion over 10 years.
The Opportunity tax credit is more generous than the Hope version, providing a credit of up to $2,500, rather than $1,800, and it phases out at a higher income level: $160,000 for married couples filing jointly, instead of $100,000. It is also partially refundable, so students and families with little or no tax liability can receive up to $1,000 of it as a tax refund.
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