Middle Class College Tuition Tax Credit Expansion Act of 2016

This bill amends the Internal Revenue Code to replace the Hope Scholarship and Lifetime Learning tax credits with a new American Opportunity Tax Credit that:

• allows an increased income tax credit for the qualified tuition and related expenses of a student who is carrying at least one half of a normal course load,
• increases the income threshold for reductions in the credit amount based upon modified adjusted gross income,
• allows a lifetime dollar limitation on such credit of $25,000 for all taxable years,
• prohibits taxpayers who have fraudulently or recklessly claimed the credit from receiving the credit during a specified disallowance period, and
• makes 50% of the credit refundable.

The bill also allows an exclusion from gross income of any amount received as a Federal Pell Grant.