Reps. Brian Fitzpatrick and Lloyd Doggett introduced the American Opportunity Student Tax Relief Act. This legislation assures that college emergency grants to students authorized by the CARES Act are not taxed. It expands the American Opportunity Tax Credit, which already helps millions of students pay for the costs of college, with both a short-term expansion of the incentive during the pandemic and long-term improvements to the program.
“Congress must work together to make sure that we provide relief for students pursuing higher education who have chosen to invest in their future,” Fitzpatrick said. “This bipartisan bill will not only provide a short-term boost to education tax credits in 2020, but will strengthen and simplify the American Opportunity Tax Credit going forward — making the credit more student friendly. This legislation also will ensure that emergency financial aid grants provided to students under the CARES Act are not taxed.”
Since enacted in 2009, the American Opportunity Tax Credit has helped millions of students to pay for college, providing assistance with both tuition and other costs not always covered by financial aid, like books and room and board. The credit offers a $2,500 credit against federal taxes for four years, a portion of which is refundable. This legislation would increase the size of the credit for all during the pandemic and increase the portion that is refundable to put the economically disadvantaged, and in particular first-generation college students, on a more even playing field. Assisting students helps families struggling to fund college tuition in this time and will also support the many universities that face their own uncertain future.