American Opportunity Tax Credit Enhancement Act of 2021
Bill: S.2465 | Sponsor: Sen. Menendez, Robert (D-NJ)
Policy area: Taxation

Summary:
American Opportunity Tax Credit Enhancement Act of 2021
This bill modifies the American Opportunity and Lifetime Learning tax credits to make the American Opportunity tax credit 100% refundable. It also modifies the provision denying the American Opportunity tax credit to students convicted of a federal or state felony relating to the possession or distribution of a controlled substance. Students may not be denied such credit unless the prison term for the drug offense is at least 15 years.

To amend the Internal Revenue Code of 1986 to make the American 
    Opportunity Tax Credit fully refundable, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``American Opportunity Tax Credit 
Enhancement Act of 2021''.

SEC. 2. ENHANCEMENT OF AMERICAN OPPORTUNITY TAX CREDIT.

    (a) In General.--Section 25A of the Internal Revenue Code of 1986 
is amended--
            (1) in subsection (b)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) Per student credit.--In the case of any eligible 
        student for whom an election is in effect under this section 
        for any taxable year, the American Opportunity Tax Credit is an 
        amount equal to 100 percent of so much of the qualified tuition 
        and related expenses paid by the taxpayer during the taxable 
        year (for education furnished to the eligible student during 
        any academic period beginning in such taxable year) as does not 
        exceed $5,000.'', and
                    (B) in paragraph (2)(D)--
                            (i) in the heading, by inserting 
                        ``serious'' before ``felony'', and
                            (ii) by striking ``Federal or State felony 
                        offense consisting of the possession or 
                        distribution of a controlled substance'' and 
                        inserting ``Federal drug-related offense for 
                        which the minimum term of imprisonment is not 
                        less than 15 years'',
            (2) in subsection (d)--
                    (A) in paragraph (1)--
                            (i) in the heading, by striking ``In 
                        general'' and inserting ``Lifetime learning 
                        credit'',
                            (ii) by striking ``The American Opportunity 
                        Tax Credit and the Lifetime Learning Credit 
                        shall each'' and inserting ``The Lifetime 
                        Learning Credit shall'', and
                            (iii) by striking ``each such'' and 
                        inserting ``such'',
                    (B) by redesignating paragraph (2) as paragraph 
                (3), and
                    (C) by inserting after paragraph (1) the following:
            ``(2) American opportunity tax credit.--In the case of the 
        American Opportunity Tax Credit, paragraph (1) shall be 
        applied--
                    ``(A) in subparagraph (A)(ii) of such paragraph, by 
                substituting `$125,000 ($250,000' for `$80,000 
                ($160,000', and
                    ``(B) in subparagraph (B) of such paragraph, by 
                substituting `$25,000 ($50,000' for `$10,000 
                ($20,000'.'', and
            (3) in subsection (i)--
                    (A) in the heading, by striking ``Portion of'', and
                    (B) by striking ``Forty percent'' and inserting 
                ``100 percent''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.
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