II 

114TH CONGRESS 

1ST SESSION S. 699 

To amend the Internal Revenue Code of 1986 to extend and modify the 

American Opportunity Tax Credit, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 10, 2015 

Mr. SCHUMER (for himself, Mr. REID, Mr. WYDEN, Mr. BROWN, Ms. STABENOW, Mr. DURBIN, Mrs. MURRAY, Mr. WHITEHOUSE, Mr. CARDIN, Mrs. 

SHAHEEN, and Mr. MENENDEZ) introduced the following bill; which was 

read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to extend 

and modify the American Opportunity Tax Credit, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Opportunity 

5 Tax Credit Permanence and Consolidation Act of 2015’’. 

6 SEC. 2. EXTENSION AND MODIFICATION OF AMERICAN OP7 PORTUNITY TAX CREDIT. 

8 (a) IN GENERAL.—Section 25A of the Internal Rev9 enue Code of 1986 is amended to read as follows: 


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1 ‘‘SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT. 

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual who is an eligible student for any taxable year, 

4 there shall be allowed as a credit against the tax imposed 

5 by this chapter for such taxable year the amount deter6 mined under subsection (b) with respect to such indi7 vidual. 

8 ‘‘(b) AMOUNT OF CREDIT.— 

‘‘(1) STUDENT ENROLLED AT LEAST 1 9 ⁄2 TIME.— 

10 In the case of an eligible student who is carrying at 

least 1 11 ⁄2 the normal full-time workload for the course 

12 of study the student is pursuing, the amount deter13 mined under this subsection with respect to such in14 dividual is the sum of— 

15 ‘‘(A) 100 percent of so much of the quali16 fied tuition and related expenses paid by the 

17 taxpayer during the taxable year (for education 

18 furnished to the eligible student during any 

19 academic period beginning in such taxable year) 

20 as does not exceed $2,000, plus 

21 ‘‘(B) 25 percent of such expenses so paid 

22 as exceeds $2,000 but does not exceed $6,000. 

23 ‘‘(2) OTHER STUDENTS.—In the case of an eli24 gible student not described in paragraph (1), the 

25 amount determined under this subsection with re26 spect to such individual is 30 percent of so much of 


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1 the qualified tuition and related expenses paid by 

2 the taxpayer during the taxable year (for education 

3 furnished to the eligible student during any aca4 demic period beginning in such taxable year) as does 

5 not exceed $10,000. 

6 ‘‘(c) LIMITATION BASED ON MODIFIED ADJUSTED

7 GROSS INCOME.— 

8 ‘‘(1) IN GENERAL.—The amount which would 

9 (but for this paragraph) be taken into account under 

10 this section for the taxable year shall be reduced 

11 (but not below zero) by the amount determined 

12 under paragraph (2). 

13 ‘‘(2) AMOUNT OF REDUCTION.—The amount 

14 determined under this paragraph is the amount 

15 which bears the same ratio to the amount which 

16 would be so taken into account as— 

17 ‘‘(A) the excess of— 

18 ‘‘(i) the taxpayer’s modified adjusted 

19 gross income for such taxable year, over 

20 ‘‘(ii) $80,000 ($160,000 in the case of 

21 a joint return), bears to 

22 ‘‘(B) $20,000 ($40,000 in the case of a 

23 joint return). 

24 ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.— 

25 For purposes of this paragraph, the term ‘modified 


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1 adjusted gross income’ means the adjusted gross in2 come of the taxpayer for the taxable year increased 

3 by any amount excluded from gross income under 

4 section 911, 931, or 933. 

5 ‘‘(d) OTHER LIMITATIONS AND SPECIAL RULES.— 

6 For purposes of this section: 

7 ‘‘(1) LIFETIME DOLLAR LIMITATION.—In the 

8 case of qualified tuition and related expenses with 

9 respect to any individual, the aggregate amount of 

10 the credits claimed under this section for all taxable 

11 years shall not exceed $15,000, determined without 

12 regard to whether— 

13 ‘‘(A) such credits are claimed on the re14 turn of tax filed by the individual or by another 

15 taxpayer, or 

16 ‘‘(B) such expenses are treated as paid by 

17 the individual or by another taxpayer. 

18 ‘‘(2) REPORTING.—No credit shall be allowed 

19 under this section to a taxpayer with respect to the 

20 qualified tuition and related expenses of an eligible 

21 student unless the taxpayer includes the name and 

22 taxpayer identification number of such eligible stu23 dent on the return of tax for the taxable year. 

24 ‘‘(3) ADJUSTMENT FOR CERTAIN SCHOLAR25 SHIPS, ETC.— 


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1 ‘‘(A) IN GENERAL.—The amount of quali2 fied tuition and related expenses otherwise 

3 taken into account under this section with re4 spect to an individual for an academic period 

5 shall be reduced (before the application of sub6 sections (b) and (c)) by the sum of any 

7 amounts paid for the benefit of such individual 

8 which are allocable to such period as— 

9 ‘‘(i) a qualified scholarship which is 

10 excludable from gross income under section 

11 117, 

12 ‘‘(ii) an educational assistance allow13 ance under chapter 30, 31, 32, 34, or 35 

14 of title 38, United States Code, or under 

15 chapter 1606 of title 10, United States 

16 Code, and 

17 ‘‘(iii) a payment (other than a gift, 

18 bequest, devise, or inheritance within the 

19 meaning of section 102(a)) for such indi20 vidual’s educational expenses, or attrib21 utable to such individual’s enrollment at an 

22 eligible educational institution, which is ex23 cludable from gross income under any law 

24 of the United States. 


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1 ‘‘(B) COORDINATION WITH PELL GRANTS

2 NOT USED FOR QUALIFIED TUITION AND RE3 LATED EXPENSES.—Any amount determined 

4 with respect to an individual under subpara5 graph (A) which is attributable to a Federal 

6 Pell Grant under section 401 of the Higher 

7 Education Act of 1965 shall be reduced (but 

8 not below zero) by the amount of the expenses 

9 (other than qualified tuition and related ex10 penses) which are taken into account in deter11 mining the cost of attendance (as defined in 

12 section 472 of the Higher Education Act of 

13 1965, as in effect on the date of the enactment 

14 of the American Opportunity Tax Credit Per15 manence and Consolidation Act of 2015) of 

16 such individual at an eligible educational insti17 tution for the academic period for which the 

18 credit under this section is being determined. 

19 ‘‘(4) TREATMENT OF EXPENSES PAID BY DE20 PENDENT.—If a deduction under section 151 with 

21 respect to an individual is allowed to another tax22 payer for a taxable year beginning in the calendar 

23 year in which such individual’s taxable year begins— 


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1 ‘‘(A) no credit shall be allowed under this 

2 section to such individual for such individual’s 

3 taxable year, and 

4 ‘‘(B) qualified tuition and related expenses 

5 paid by such individual during such individual’s 

6 taxable year shall be treated for purposes of 

7 this section as paid by such other taxpayer. 

8 ‘‘(5) TREATMENT OF CERTAIN PREPAY9 MENTS.—If qualified tuition and related expenses 

10 are paid by the taxpayer during a taxable year for 

11 an academic period which begins during the first 3 

12 months following such taxable year, such academic 

13 period shall be treated for purposes of this section 

14 as beginning during such taxable year. 

15 ‘‘(6) DENIAL OF DOUBLE BENEFIT.—No credit 

16 shall be allowed under this section for any expense 

17 for which a deduction is allowed under any other 

18 provision of this chapter. 

19 ‘‘(7) NO CREDIT FOR MARRIED INDIVIDUALS

20 FILING SEPARATE RETURNS.—If the taxpayer is a 

21 married individual (within the meaning of section 

22 7703), this section shall apply only if the taxpayer 

23 and the taxpayer’s spouse file a joint return for the 

24 taxable year. 


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1 ‘‘(8) NONRESIDENT ALIENS.—If the taxpayer is 

2 a nonresident alien individual for any portion of the 

3 taxable year, this section shall apply only if such in4 dividual is treated as a resident alien of the United 

5 States for purposes of this chapter by reason of an 

6 election under subsection (g) or (h) of section 6013. 

7 ‘‘(e) ELECTION NOT TO HAVE SECTION APPLY.—A 

8 taxpayer may elect not to have this section apply with re9 spect to the qualified tuition and related expenses of an 

10 individual for any taxable year. 

11 ‘‘(f) DEFINITIONS.—For purposes of this section: 

12 ‘‘(1) ELIGIBLE STUDENT.—The term ‘eligible 

13 student’ means, with respect to any taxable year, an 

14 individual who— 

15 ‘‘(A) is enrolled for at least one academic 

16 period which begins during such taxable year at 

17 an eligible educational institution, and 

18 ‘‘(B) meets the requirements of section 

19 484(a)(1) of the Higher Education Act of 1965, 

20 as in effect on the date of the enactment of the 

21 American Opportunity Tax Credit Permanence 

22 and Consolidation Act of 2015. 

23 ‘‘(2) QUALIFIED TUITION AND RELATED EX24 PENSES.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 tuition and related expenses’ means tuition, 

3 fees, and course materials required for the en4 rollment or attendance of— 

5 ‘‘(i) the taxpayer, 

6 ‘‘(ii) the taxpayer’s spouse, or 

7 ‘‘(iii) any dependent of the taxpayer 

8 with respect to whom the taxpayer is al9 lowed a deduction under section 151, 

10 at an eligible educational institution for courses 

11 of instruction of such individual at such institu12 tion. 

13 ‘‘(B) EXCEPTION FOR EDUCATION INVOLV14 ING SPORTS, ETC.—Such term does not include 

15 expenses with respect to any course or other 

16 education involving sports, games, or hobbies, 

17 unless such course or other education is part of 

18 the individual’s degree program. 

19 ‘‘(C) EXCEPTION FOR NONACADEMIC

20 FEES.—Such term does not include student ac21 tivity fees, athletic fees, insurance expenses, or 

22 other expenses unrelated to an individual’s aca23 demic course of instruction. 

24 ‘‘(D) COMPUTER TECHNOLOGY AND

25 EQUIPMENT.—Such term includes expenses for 


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1 the purchase of computer technology or equip2 ment (as defined in section 170(e)(6)(F)(i)), or 

3 Internet access and related services, only to the 

4 extent the purchase of such technology, equip5 ment, or services is specifically required by the 

6 individual’s academic course of instruction or 

7 degree program. 

8 ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 

9 The term ‘eligible educational institution’ means an 

10 institution— 

11 ‘‘(A) which is described in section 481 of 

12 the Higher Education Act of 1965, as in effect 

13 on the date of the enactment of the American 

14 Opportunity Tax Credit Permanence and Con15 solidation Act of 2015, and 

16 ‘‘(B) which is eligible to participate in a 

17 program under title IV of such Act. 

18 ‘‘(g) PORTION OF CREDIT REFUNDABLE.—The less19 er of— 

20 ‘‘(1) the credit allowed under this section for a 

21 taxable year (determined after application of sub22 sections (c)(1) and (d) and without regard to this 

23 subsection and section 26(a)(2)), or 

24 ‘‘(2) $1,500, 


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1 shall be treated as a credit allowable under subpart C (and 

2 not allowed under this section). The preceding sentence 

3 shall not apply to any taxpayer for any taxable year if 

4 such taxpayer is a child to whom subsection (g) of section 

5 1 applies for such taxable year. 

6 ‘‘(h) REGULATIONS.—The Secretary may prescribe 

7 such regulations as may be necessary or appropriate to 

8 carry out this section, including regulations providing for 

9 a recapture of the credit allowed under this section in 

10 cases where there is a refund in a subsequent taxable year 

11 of any amount which was taken into account in deter12 mining the amount of such credit.’’. 

13 (b) CLERICAL AMENDMENT.—The item relating to 

14 section 25A in the table of sections for subpart A of part 

15 IV of subchapter A of chapter 1 of the Internal Revenue 

16 Code of 1986 is amended to read as follows: 

‘‘Sec. 25A. American Opportunity Tax Credit.’’. 

17 (c) CONFORMING AMENDMENTS.— 

18 (1) Subparagraph (B) of section 72(t)(7) of 

19 such Code is amended by striking ‘‘25A(g)(2)’’ and 

20 inserting ‘‘25A(d)(3)’’. 

21 (2) Paragraph (2) of section 221(d) of such 

22 Code is amended— 

23 (A) by striking ‘‘25A(g)(2)’’ in subpara24 graph (B) and inserting ‘‘25A(d)(3)’’, and 


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1 (B) by striking ‘‘25A(f)(2)’’ and inserting 

2 ‘‘25A(f)(3)’’. 

3 (3) Paragraph (3) of section 221(d) of such 

4 Code is amended by striking ‘‘25A(b)(3)’’ and in5 serting ‘‘25A(f)(1) (but only with respect to a student who is carrying at least 1 6 ⁄2 the normal full-time 

7 workload for the course of study the student is pur8 suing)’’. 

9 (4) Paragraph (1) of section 222(d) of such 

10 Code is amended— 

11 (A) by striking ‘‘25A(f)’’ and inserting 

12 ‘‘25A(f)(2)’’, and 

13 (B) by striking ‘‘25A(g)(2)’’ and inserting 

14 ‘‘25A(d)(3)’’. 

15 (5) Clause (v) of section 529(c)(3)(B) of such 

16 Code is amended— 

17 (A) by striking ‘‘25A(g)(2)’’ in subclause 

18 (I) and inserting ‘‘25A(d)(3)’’, and 

19 (B) by striking ‘‘HOPE AND LIFETIME

20 LEARNING CREDITS’’ in the heading and insert21 ing ‘‘AMERICAN OPPORTUNITY CREDIT’’. 

22 (6) Clause (i) of section 529(e)(3)(B) of such 

23 Code is amended by striking ‘‘25A(b)(3)’’ and in24 serting ‘‘25A(f)(1) (but only with respect to a student who is carrying at least 1 25 ⁄2 the normal full-time 


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1 workload for the course of study the student is pur2 suing)’’. 

3 (7) Subparagraph (C) of section 530(d)(2) of 

4 such Code is amended— 

5 (A) by striking ‘‘25A(g)(2)’’ in clause (i)(I) 

6 and inserting ‘‘25A(d)(3)’’, and 

7 (B) by striking ‘‘HOPE AND LIFETIME

8 LEARNING CREDITS’’ in the heading and insert9 ing ‘‘AMERICAN OPPORTUNITY CREDIT’’. 

10 (8) Clause (iii) of section 530(d)(4)(B) of such 

11 Code is amended by striking ‘‘25A(g)(2)’’ and in12 serting ‘‘25A(d)(3)’’. 

13 (9) Section 1400O of such Code is amended— 

14 (A) by striking ‘‘25A(f)(2)’’ and inserting 

15 ‘‘25A(f)(3)’’, 

16 (B) by inserting ‘‘(as in effect on the date 

17 of the enactment of this section)’’ after 

18 ‘‘25A(b)(1)’’ in paragraph (2), and 

19 (C) by inserting ‘‘(as in effect on the date 

20 of the enactment of this section)’’ after 

21 ‘‘25A(c)(1)’’ in paragraph (3). 

22 (10) Subsection (e) of section 6050S of such 

23 Code is amended by striking ‘‘subsection (g)(2)’’ and 

24 inserting ‘‘subsection (d)(3)’’. 


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1 (11) Subparagraph (A) of section 6211(b)(4) of 

2 such Code is amended by striking ‘‘subsection 

3 (i)(6)’’ and inserting ‘‘subsection (g)’’. 

4 (12) Subparagraph (J) of section 6213(g)(2) of 

5 such Code is amended by striking ‘‘25A(g)(1)’’ and 

6 inserting ‘‘25A(d)(2)’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to taxable years beginning after 

9 December 31, 2014. 

10 SEC. 3. EXPANSION OF PELL GRANT EXCLUSION FROM 

11 GROSS INCOME. 

12 (a) IN GENERAL.—Paragraph (1) of section 117(b) 

13 of the Internal Revenue Code of 1986 is amended by strik14 ing ‘‘received by an individual’’ and all that follows and 

15 inserting ‘‘received by an individual— 

16 ‘‘(1) as a scholarship or fellowship grant to the 

17 extent the individual establishes that, in accordance 

18 with the conditions of the grant, such amount was 

19 used for qualified tuition and related expenses, or 

20 ‘‘(2) as a Federal Pell Grant under section 401 

21 of the Higher Education Act of 1965 (as in effect 

22 on the date of the enactment of the American Op23 portunity Tax Credit Permanence and Consolidation 

24 Act of 2015).’’. 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2014. 

Æ 


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