What Was the Hope Credit?
Let me explain the Hope Credit, also known as the Hope Scholarship Tax Credit—it was a nonrefundable education tax credit available to eligible American taxpayers. You could claim it for qualifying students during their first two years of postsecondary education.
This credit, along with others like the Lifetime Learning Credit, was designed to promote higher education by offering some reimbursement for tuition and fees paid by parents or students.
Understanding the Hope Credit
Before it evolved into the American Opportunity Tax Credit in 2009, the Hope Credit was one of two nonrefundable education credits you could use—the other being the Lifetime Learning Credit, which remains available today.
You could apply it to tuition, fees, and certain other expenses like books, but it didn't cover room and board, medical expenses, or insurance.
As of 2025, the maximum under the AOTC is $2,500, and anyone incurring qualifying educational expenses can claim it, including parents paying for their children's tuition and fees, as long as they meet income restrictions.
Important Changes with the AOTC
When the Hope Credit expanded and became the American Opportunity Tax Credit, part of it turned refundable. This means if the credit reduces your tax owed to zero, you can get up to 40% of the remaining amount—up to $1,000—refunded directly to you.
Special Considerations
The IRS defines a qualified student as someone enrolled at least part-time in an accredited postsecondary institution at the start of the tax year, pursuing a degree or recognized credential, and without a felony drug conviction by year's end.
You can claim the credit for up to four years of postsecondary education to offset tuition and other eligible expenses. Qualified expenses include tuition paid to the school and costs for books, supplies, and equipment, even if bought externally or financed with student loans—but not if covered by scholarships, grants, or 529 plan funds.
Who Qualifies for the Hope Credit?
The Hope Credit has been succeeded by the AOTC. To get the full credit, your modified adjusted gross income needs to be $80,000 or less if single, or $160,000 or less for joint filers. There's a phase-out for incomes between $80,000 and $90,000 for individuals, and $160,000 to $180,000 for joint filers—above that, you're ineligible.
What Happened to the Hope Credit?
It was directly replaced by the American Opportunity Tax Credit.
How Many Years Can a Student Claim the Hope Credit?
Since the AOTC took its place, you can claim it for up to four years of postsecondary education.
The Bottom Line
The American Recovery and Reinvestment Act expanded the Hope Credit in 2009, renaming it the AOTC to reach more taxpayers, including those with higher incomes or no tax liability. You get the full $2,500 if your MAGI is $80,000 or less individually, or $160,000 or less jointly.
Key Takeaways
- The Hope Credit allowed eligible students to qualify for a maximum $1,800 income tax credit for the first two years of college.
- This credit was a nonrefundable tax credit that could only reduce a taxpayer’s liability to zero, so any amount that remained from the credit was automatically forfeited by the taxpayer.
- To qualify, taxpayers were subject to eligibility requirements, including household income.
- In 2009, the American Opportunity Tax Credit replaced the Hope credit.
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