His accountant has informed Rey that he qualifies for the American opportunity tax credit because he's a full-time student at the local university. Assuming Rey qualifies for a $2500 tax credit this means the credit will

1.) reduce his taxes owed by $2,500

2.) reduce his taxable income by $2,500

3.) increase his itemized deductions by $2,500

4.) guarantee him a tax refund of $2,500