The U.S. House of Representatives recently passed its tax bill. This bill would repeal many of the higher education tax benefits on which millions of college students and parents rely. But it isn’t law yet.
The U.S. Senate will soon act on a similar bill. But as currently written, the Senate’s bill would keep the House-targeted college tax benefits in place and unchanged. These benefits include:
- College Savings Bonds: The House would start taxing students on money they use from such bonds to pay college expenses.
- Coverdell Education Saving Accounts: The House would prohibit new deposits into these accounts.
- Death and Disability Debt Discharge: The House would tax student loan debts forgiven for borrowers who die or suffer total and permanent disabilities.
- Employer-Provided Educational Assistance: The House would subject what your employer spends on your tuition, fees, books, and supplies to taxation The Senate would leave current law as is — so only employer spending above $5,250 would be taxed.
- Graduate Tuition Reduction Exclusion: The House would make all tuition reductions awarded to graduate research and teaching assistants taxable income.
- Interest Deduction on Student Loans: The House would end this $2,500 per year deduction.
- Lifetime Learning and American Opportunity Tax Credits: The House would repeal the Lifetime Learning credit that applies to what you pay on a course helping you get a degree or a job skill. Instead, it would expand the American Opportunity credit from 4 to 5 years. But the American Opportunity credit applies only to degree-related courses. The Senate would leave both credits unchanged.
- Tuition and Fee Deduction: The House would kill this $4,000 per year deduction for what you pay in tuition and fees for yourself, your spouse, and your dependents.
All these changes would take affect in 2018 unless the Senate causes them to be dropped.
The Senate will amend, debate, and vote on its bill soon after Thanksgiving, so there’s little time to contact your Senators (their contact information is here). Urge them to use the Senate bill to preserve the tax benefits described above.
The House and Senate must negotiate to finalize all differences in the bills they pass, and such negotiations often lead to one or the other bill’s differences being dropped. So the last, best hope for preserving these tax benefits is a Senate tax bill that opposes the House’s plan to kill them.
Contact College Affordability Solutions at (512) 366-5354 or email@example.com if you have questions.