SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Middle Class College Tuition Tax 
Credit Expansion Act of 2008''.

SEC. 2. QUALIFIED TUITION AND RELATED EXPENSES CREDIT.

    (a) In General.--Section 25A of the Internal Revenue Code of 1986 
(relating to Hope and Lifetime Learning Credits) is amended to read as 
follows:

``SEC. 25A. QUALIFIED TUITION AND RELATED EXPENSES CREDIT.

    ``(a) Allowance of Credit.--In the case of any eligible individual 
for whom an election is in effect under this section, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to 50 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 individual during any 
academic period beginning in such taxable year) as does not exceed 
$10,000.
    ``(b) Limitations.--
            ``(1) Modified adjusted gross income limitation.--
                    ``(A) In general.--The amount which would (but for 
                this paragraph) be taken into account under subsection 
                (a) for the taxable year shall be reduced (but not 
                below zero) by the amount determined under paragraph 
                (2).
                    ``(B) Amount of reduction.--The amount determined 
                under this paragraph is the amount which bears the same 
                ratio to the amount which would be so taken into 
                account as--
                            ``(i) the excess of--
                                    ``(I) the taxpayer's modified 
                                adjusted gross income for such taxable 
                                year, over
                                    ``(II) the applicable amount under 
                                paragraph (4), bears to
                            ``(ii) $5,000 ($10,000 in the case of a 
                        joint return).
                    ``(C) Modified adjusted gross income.--The term 
                `modified adjusted 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) Applicable amount.--The applicable amount 
                under this subparagraph is--
                            ``(i) in the case of a joint return, 200 
                        percent of the dollar amount in effect under 
                        subparagraph (B) for the taxable year, and
                            ``(ii) in any other case, $100,000.
            ``(2) Credit allowed for only 4 taxable years.--An election 
        to have this section apply with respect to any eligible 
        individual may not be made for any taxable year if such an 
        election (by the taxpayer or any other individual) is in effect 
        with respect to such individual for any 4 prior taxable years.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible individual.--The term `eligible individual' 
        means any individual described in paragraph (2).
            ``(2) Qualified tuition and related expenses.--
                    ``(A) In general.--The term `qualified tuition and 
                related expenses' means tuition and fees required for 
                the 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 allowed a 
                        deduction under section 151, at an eligible 
                        educational institution for courses of 
                        instruction of such individual at such 
                        institution.
                    ``(B) Books.--Such term shall include books 
                required for such individual's academic courses of 
                instruction at the eligible educational institution.
                    ``(C) Exception for education involving sports, 
                etc.--Such term does not include expenses with respect 
                to any course or other education involving sports, 
                games, or hobbies, unless such course or other 
                education is part of the individual's degree program.
                    ``(D) Exception for nonacademic fees.--Such term 
                does not include student activity fees, athletic fees, 
                insurance expenses, or other expenses unrelated to an 
                individual's academic course of instruction.
            ``(3) Eligible educational institution.--The term `eligible 
        educational institution' means an institution--
                    ``(A) which is described in section 481 of the 
                Higher Education Act of 1965, as in effect on the date 
                of the enactment of the Taxpayer Relief Act of 1997, 
                and
                    ``(B) which is eligible to participate in a program 
                under title IV of the Higher Education Act of 1965.
    ``(d) Special Rules.--
            ``(1) Identification requirement.--No credit shall be 
        allowed under subsection (a) to a taxpayer with respect to an 
        eligible student unless the taxpayer includes the name and 
        taxpayer identification number of such student on the return of 
        tax for the taxable year.
            ``(2) Adjustment for certain scholarships.--The amount of 
        qualified tuition and related expenses otherwise taken into 
        account under subsection (a) with respect to an individual for 
        an academic period shall be reduced (before the application of 
        subsections (a) and (b)) by the sum of any amounts paid for the 
        benefit of such individual which are allocable to such period 
        as--
                    ``(A) a qualified scholarship which is excludable 
                from gross income under section 117,
                    ``(B) an educational assistance allowance under 
                chapter 30, 31, 32, 34, or 35 of title 38, United 
                States Code, or under chapter 1606 of title 10, United 
                States Code, and
                    ``(C) a payment (other than a gift, bequest, 
                devise, or inheritance within the meaning of section 
                102(a)) for such student'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.
            ``(3) Treatment of expenses paid by dependent.--If a 
        deduction under section 151 with respect 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 subsection 
                (a) to such individual for such individual's taxable 
                year, and
                    ``(B) qualified tuition and related expenses paid 
                by such individual during such individual'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 taxpayer during a 
        taxable year for an academic period which begins during the 
        first 3 months following such taxable year, such academic 
        period shall be treated for purposes of this section as 
        beginning during such taxable year.
            ``(5) Denial of double benefit.--No credit shall be allowed 
        under this section for any expense for which deduction is 
        allowed under any other provision of this chapter.
            ``(6) No credit for married individuals filing separate 
        returns.--If the taxpayer is a married 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 individual 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.
    ``(e) Inflation Adjustment.--
            ``(1) In general.--In the case of a taxable year beginning 
        after 2009, the $100,000 amount in subsection (b)(1)(D)(ii) 
        shall each be increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the taxable year begins, determined by substituting 
                `calendar year 2008' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding.--If any amount as adjusted under paragraph 
        (1) is not a multiple of $1,000, such amount shall be rounded 
        to the next lowest multiple of $1,000.
    ``(f) Regulations.--The Secretary may prescribe such regulations 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 expense which was taken into account in determining the amount 
of such credit.''.
    (b) Repeal of Deduction for Qualified Tuition and Related 
Expenses.--Part VII of subchapter B of chapter 1 of such Code (relating 
to additional itemized deductions for individuals) is amended by 
striking section 222.
    (c) Conforming Amendments.--(1) Section 62(a) of such Code is 
amended by striking paragraph (18).
    (2) Subparagraph (A) of section 86(b)(2) of such Code is amended by 
striking ``, 222''.
    (3) Subparagraph (B) of section 72(t)(7) of such Code is amended by 
striking ``section 25A(g)(2)'' and inserting ``section 25A(d)(2)''.
    (4) Subparagraph (A) of section 135(c)(4) of such Code is amended 
by striking ``, 222''.
    (5) Subparagraph (A) of section 137(b)(3) of such Code is amended 
by striking ``, 222''.
    (6) Subparagraph (A) of section 199(d)(2) of such Code is amended 
by striking ``, 222''.
    (7) Clause (ii) of section 219(g)(3)(A) of such Code is amended by 
striking ``, 222''.
    (8) Clause (i) of section 221(b)(2)(C) of such Code is amended by 
striking ``, 222''.
    (9) Clause (iii) of section 469(i)(3)(F) of such Code is amended by 
striking ``221, and 222'' and inserting ``and 221''.
    (10) Subsection (d) of section 221 of such Code is amended--
            (A) by striking ``section 25A(g)(2)'' in paragraph (2)(B) 
        and inserting ``section 25A(d)(2)'', and
            (B) by striking ``section 25A(f)(2)'' in the second 
        sentence of paragraph (2) and inserting ``section 25A(c)(3)''.
    (11) Paragraph (3) of section 221(d) of such Code is amended to 
read as follows:
            ``(3) 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 the date of the enactment 
                of the Taxpayer Relief Act of 1997, and
                    ``(B) is carrying at least \1/2\ the normal full-
                time workload for the course of study the student is 
                pursuing.''.
    (12) Subclause (I) of section 529(c)(3)(B)(v) of such Code is 
amended by striking ``section 25A(g)(2)'' and inserting ``25A(d)(2)''.
    (13) Clause (i) of section 529(e)(3)(B) of such Code is amended by 
striking ``section 25A(b)(3)'' and inserting ``section 221(d)(3)''.
    (14) Subclause (I) of section 530(d)(2)(C)(i) of such Code is 
amended by striking ``section 25A(g)(2)'' and inserting ``section 
25A(d)(2)''.
    (15) Clause (iii) of section 530(d)(4)(B) of such Code is amended 
by striking ``section 25A(g)(2)'' and inserting ``25A(d)(2)''.
    (16) Section 1400O of such Code is amended by adding at the end the 
following flush sentence:
``For purposes of this section, any reference to section 25A shall be 
treated as a reference to such section as in effect on the day before 
the date of the enactment of this sentence.''.
    (17) Subparagraph (J) of section 6213(g)(2) of such Code is amended 
by striking ``section 25A(g)(1)'' and inserting ``section 25A(d)(1)''.
    (d) Clerical Amendments.--(1) The table of sections for subpart A 
of part IV of subchapter A of chapter 1 of such Code is amended by 
striking the item relating to section 25A and inserting the following:

``25A. Qualified tuition and related expenses credit.''.
    (2) The table of sections for part VII of subchapter B of chapter 1 
of such Code is amended by striking the item relating to section 222.
    (e) Effective Date.--The amendments made by this section shall 
apply to expenses paid after December 31, 2008, for education furnished 
in academic periods beginning after such date.
Middle Class College Tuition Tax Credit Expansion Act of 2008 - Amends the Internal Revenue Code to replace the Hope Scholarship and Lifetime Learning tax credits with a tax credit for 50% of qualified tuition and related expenses (including required books), up to $10,000, for attendance at an institution of higher education.
To amend the Internal Revenue Code of 1986 to consolidate the current education tax incentives as one credit against income tax for qualified tuition and related expenses.