Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Student and Family 
Tax Simplification Act’’. 
SEC. 2. CONSOLIDATION OF CERTAIN TAX BENEFITS FOR 
EDUCATIONAL EXPENSES. 
(a) AMERICAN OPPORTUNITY TAX CREDIT.—Section 
25A of the Internal Revenue Code of 1986 is amended to 
read as follows: 
‘‘SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT. 
‘‘(a) IN GENERAL.—In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year, with respect to each eligible 
student, an amount equal to the sum of— 
‘‘(1) 100 percent of so much of the qualified tui-
tion and related expenses paid by the taxpayer dur-
ing the taxable year (for education furnished to the el-
igible student during any academic period beginning 
in such taxable year) as does not exceed $2,000, plus 
‘‘(2) 25 percent of so much of such expenses so 
paid as exceeds the dollar amount in effect under 
paragraph (1) but does not exceed twice such dollar 
amount. 
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‘‘(b) PORTION OF CREDIT REFUNDABLE.—So much of 
the credit allowable under subsection (a) with respect to 
each eligible student (determined without regard to this sub-
section and section 26(a) and after application of all other 
provisions of this section) as does not exceed $1,500 shall 
be treated as a credit allowable under subpart C (and not 
under this part). The preceding sentence shall not apply 
to any taxpayer for any taxable year if such taxpayer is 
a child to whom section 1(g) applies for such taxable year. 
‘‘(c) LIMITATION BASED
ON MODIFIED ADJUSTED 
GROSS INCOME.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
credit under subsection (a) for any taxable year shall 
be reduced (but not below zero) by an amount which 
bears the same ratio to the amount so allowable (de-
termined without regard to this subsection and sub-
section (b) but after application of all other provi-
sions of this section) as— 
‘‘(A) the excess of— 
‘‘(i) the taxpayer’s modified adjusted 
gross income for such taxable year, over 
‘‘(ii) $80,000 (twice such amount in 
the case of a joint return), bears to 
‘‘(B) $10,000 (twice such amount in the 
case of a joint return). 
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‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—For 
purposes of this subsection, the term ‘modified ad-
justed gross income’ means the adjusted gross income 
of the taxpayer for the taxable year increased by any 
amount excluded from gross income under section 
911, 931, or 933. 
‘‘(d) OTHER LIMITATIONS.—No credit shall be allowed 
under this section with respect to any eligible student for 
any taxable year if— 
‘‘(1) such student was taken into account in de-
termining the credit allowed under this section (by 
the taxpayer or any other individual) for any 4 prior 
taxable years, or 
‘‘(2) such student has completed (before the be-
ginning of such taxable year) the first 4 years of post-
secondary education at an eligible educational insti-
tution. 
‘‘(e) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE
STUDENT.—The term ‘eligible 
student’ means, with respect to any academic period, 
a student who— 
‘‘(A) meets the requirements of section 
484(a)(1) of the Higher Education Act of 1965 
(20 U.S.C. 1091(a)(1)), as in effect on August 5, 
1997, and 
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‘‘(B) is carrying at least 1⁄2 the normal full- 
time work load for the course of study the stu-
dent is pursuing. 
‘‘(2) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES.— 
‘‘(A) IN GENERAL.—The term ‘qualified tui-
tion and related expenses’ means tuition, fees, 
and course materials, required for enrollment or 
attendance of— 
‘‘(i) the taxpayer, 
‘‘(ii) the taxpayer’s spouse, or 
‘‘(iii) any dependent of the taxpayer 
with respect to whom the taxpayer is al-
lowed a deduction under section 151, 
at an eligible educational institution for courses 
of instruction of such individual at such institu-
tion. 
‘‘(B) EXCEPTION FOR EDUCATION INVOLV-
ING SPORTS, ETC.—Such term does not include 
expenses with respect to any course or other edu-
cation involving sports, games, or hobbies, unless 
such course or other education is part of the in-
dividual’s degree program. 
‘‘(C) 
EXCEPTION
FOR
NONACADEMIC 
FEES.—Such term does not include student ac-
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tivity fees, athletic fees, insurance expenses, or 
other expenses unrelated to an individual’s aca-
demic course of instruction. 
‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.—The 
term ‘eligible educational institution’ means an insti-
tution— 
‘‘(A) which is described in section 481 of the 
Higher Education Act of 1965 (20 U.S.C. 1088), 
as in effect on August 5, 1997, and 
‘‘(B) which is eligible to participate in a 
program under title IV of such Act. 
‘‘(f) SPECIAL RULES.— 
‘‘(1) IDENTIFICATION REQUIREMENT.—No credit 
shall be allowed under subsection (a) to a taxpayer 
with respect to the qualified tuition and related ex-
penses of an individual unless the taxpayer includes 
the name and taxpayer identification number of such 
individual, and the employer identification number of 
any institution to which such expenses were paid, on 
the return of tax for the taxable year. 
‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS, 
ETC.— 
‘‘(A) IN GENERAL.—The amount of quali-
fied tuition and related expenses otherwise taken 
into account under subsection (a) with respect to 
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an individual for an academic period shall be 
reduced (before the application of subsection (c)) 
by the sum of any amounts paid for the benefit 
of such individual which are allocable to such 
period as— 
‘‘(i) a qualified scholarship which is 
excludable from gross income under section 
117, 
‘‘(ii) an educational assistance allow-
ance under chapter 30, 31, 32, 34, or 35 of 
title 38, United States Code, or under chap-
ter 1606 of title 10, United States Code, 
and 
‘‘(iii) a payment (other than a gift, be-
quest, devise, or inheritance within the 
meaning of section 102(a)) for such individ-
ual’s educational expenses, or attributable to 
such individual’s enrollment at an eligible 
educational institution, which is excludable 
from gross income under any law of the 
United States. 
‘‘(B) COORDINATION
WITH
PELL
GRANTS 
NOT
USED
FOR
QUALIFIED
TUITION
AND
RE-
LATED
EXPENSES.—For purposes of subpara-
graph (A), the amount of any Federal Pell Grant 
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under section 401 of the Higher Education Act 
of 1965 (20 U.S.C. 1070a) shall be reduced (but 
not below zero) by the amount of expenses (other 
than qualified tuition and related expenses) 
which are taken into account in determining the 
cost of attendance (as defined in section 472 of 
the Higher Education Act of 1965, as in effect on 
the date of the enactment of this paragraph) of 
such individual at an eligible educational insti-
tution for the academic period for which the 
credit under this section is being determined. 
‘‘(3) TREATMENT
OF
EXPENSES
PAID
BY
DE-
PENDENT.—If a deduction under section 151 with re-
spect to an individual is allowed to another taxpayer 
for a taxable year beginning in the calendar year in 
which such individual’s taxable year begins— 
‘‘(A) no credit shall be allowed under sub-
section (a) to such individual for such individ-
ual’s taxable year, and 
‘‘(B) qualified tuition and related expenses 
paid by such individual during such individ-
ual’s taxable year shall be treated for purposes of 
this section as paid by such other taxpayer. 
‘‘(4) TREATMENT OF CERTAIN PREPAYMENTS.—If 
qualified tuition and related expenses are paid by the 
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taxpayer during a taxable year for an academic pe-
riod which begins during the first 3 months following 
such taxable year, such academic period shall be 
treated for purposes of this section as beginning dur-
ing such taxable year. 
‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit 
shall be allowed under this section for any amount for 
which a deduction is allowed under any other provi-
sion of this chapter. 
‘‘(6) NO CREDIT FOR MARRIED INDIVIDUALS FIL-
ING SEPARATE RETURNS.—If the taxpayer is a mar-
ried individual (within the meaning of section 7703), 
this section shall apply only if the taxpayer and the 
taxpayer’s spouse file a joint return for the taxable 
year. 
‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is 
a nonresident alien individual for any portion of the 
taxable year, this section shall apply only if such in-
dividual is treated as a resident alien of the United 
States for purposes of this chapter by reason of an 
election under subsection (g) or (h) of section 6013. 
‘‘(g) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of a taxable year 
beginning after 2018, the $2,000 amount in sub-
section (a)(1), the $1,500 amount in subsection (b), 
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and the $80,000 amount in subsection (c)(1)(A)(ii) 
shall each be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year 
in which the taxable year begins, determined by 
substituting ‘calendar year 2017’ for ‘calendar 
year 1992’ in subparagraph (B) thereof. 
‘‘(2) ROUNDING.—If any amount as adjusted 
under paragraph (1) is not a multiple of $100 
($1,000 in the case of the amount in subsection 
(c)(1)(A)(ii)), such amount shall be rounded to the 
next lowest multiple of $100 ($1,000 in the case of the 
amount in subsection (c)(1)(A)(ii)). 
‘‘(h) REGULATIONS.—The Secretary may prescribe 
such regulations or other guidance as may be necessary or 
appropriate to carry out this section, including regulations 
providing for a recapture of the credit allowed under this 
section in cases where there is a refund in a subsequent 
taxable year of any amount which was taken into account 
in determining the amount of such credit.’’. 
(b) REQUIREMENT TO REPORT TUITION PAID RATHER 
THAN TUITION BILLED.—Section 6050S(b)(2)(B)(i) is 
amended by striking ‘‘or the aggregate amount billed’’. 
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(c) REPEAL OF DEDUCTION FOR QUALIFIED TUITION 
AND RELATED EXPENSES.—Part VII of subchapter B of 
chapter 1 of such Code is amended by striking section 222 
(and by striking the item relating to such section in the 
table of sections for such part). 
(d) CONFORMING AMENDMENTS.— 
(1) Section 62(a) of such Code is amended by 
striking paragraph (18). 
(2) Section 72(t)(7)(B) of such Code is amended 
by striking ‘‘section 25A(g)(2)’’ and inserting ‘‘section 
25A(f)(2)’’. 
(3) 
Sections 
86(b)(2)(A), 
135(c)(4)(A), 
137(b)(3)(A), 
199(d)(2)(A), 
219(g)(3)(A)(ii), 
and 
221(b)(2)(C)(i) of such Code are each amended by 
striking ‘‘222,’’. 
(4) Section 469(i)(3)(F)(iii) of such Code is 
amended by striking ‘‘221, and 222’’ and inserting 
‘‘and 221’’. 
(5) Section 529(c)(3)(B)(v)(I) of such Code is 
amended by striking ‘‘section 25A(g)(2)’’ and insert-
ing ‘‘section 25A(f)(2)’’. 
(6) Section 529(e)(3)(B)(i) of such Code is 
amended by striking ‘‘section 25A(b)(3)’’ and insert-
ing ‘‘section 25A(d)’’. 
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(7) Section 530(d)(2)(C) of such Code is amend-
ed— 
(A) by striking ‘‘section 25A(g)(2)’’ in 
clause (i)(I) and inserting ‘‘section 25A(f)(2)’’, 
and 
(B) by striking ‘‘HOPE
AND
LIFETIME 
LEARNING CREDITS’’ in the heading and insert-
ing ‘‘AMERICAN OPPORTUNITY TAX CREDIT’’. 
(8) Section 530(d)(4)(B)(iii) of such Code is 
amended by striking ‘‘section 25A(g)(2)’’ and insert-
ing ‘‘section 25A(d)(4)(B)’’. 
(9) Section 6050S(e) of such Code is amended by 
striking ‘‘subsection (g)(2)’’ and inserting ‘‘subsection 
(f)(2)’’. 
(10) Section 6211(b)(4)(A) of such Code is 
amended by striking ‘‘subsection (i)(6)’’ and inserting 
‘‘subsection (b)’’. 
(11) Section 6213(g)(2)(J) of such Code is 
amended by striking ‘‘TIN required under section 
25A(g)(1)’’ and inserting ‘‘TIN, and employer identi-
fication number, required under section 25A(f)(1)’’. 
(12) Section 1004(c) of division B of the Amer-
ican Recovery and Reinvestment Tax Act of 2009 is 
amended— 
(A) in paragraph (1)— 
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(i) by striking ‘‘section 25A(i)(6)’’ each 
place it appears and inserting ‘‘section 
25A(b)’’, 
(ii) by striking ‘‘with respect to taxable 
years beginning after 2008 and before 
2018’’ in subparagraph (A) and inserting 
‘‘with respect to each taxable year’’, and 
(iii) by striking ‘‘for taxable years be-
ginning after 2008 and before 2018’’ in sub-
paragraph (B) and inserting ‘‘for each tax-
able year’’, 
(B) in paragraph (2), by striking ‘‘Section 
25A(i)(6)’’ and inserting ‘‘Section 25A(b)’’, and 
(C) in paragraph (3)(C), by striking ‘‘sub-
section (i)(6)’’ and inserting ‘‘subsection (b)’’. 
(13) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by striking the item re-
lating to section 25A and inserting the following new 
item: 
‘‘Sec. 25A. American opportunity tax credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2014. 
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SEC. 3. EXPANSION OF PELL GRANT EXCLUSION FROM 
GROSS INCOME. 
(a) IN GENERAL.—Paragraph (1) of section 117(b) of 
the Internal Revenue Code of 1986 is amended— 
(1) by striking the period at the end and insert-
ing ‘‘, or’’, 
(2) by striking ‘‘received by an individual as a 
scholarship’’ and inserting the following: ‘‘received by 
an individual— 
‘‘(A) as a scholarship’’, and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(B) as a Federal Pell Grant under section 
401 of the Higher Education Act of 1965 (20 
U.S.C. 1070a).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2014. 
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