DEFINITION of 'American Opportunity Tax Credit'

A tax credit that enabled more student and parents to pay for part of their college expenses in the 2009 and 2010 tax years by expanding the existing Hope tax credit. The maximum annual tax credit per student is $2,500 of the cost of qualified tuition and related expenses paid during the tax year.

BREAKING DOWN 'American Opportunity Tax Credit'

Major changes from the Hope credit include a $700 increase in the tax credit and allowing the credit to be used for the first four years of post-secondary education instead of only the first two years.

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