Republican lawmakers on Friday released the final version of their tax reform bill and appear on track to hold floor votes on the legislation this week.
If majorities in both the House of Representatives and the Senate approve the bill, President Donald Trump is expected to sign it.
The final bill is largely consistent with the prior Senate bill, providing tax cuts for businesses, temporary tax benefits for low- and middle-income citizens, and a new top tax rate for wealthy Americans.
The bill does restore some tax breaks that had been slated for elimination in the previous House version of the bill, including tax-free tuition waivers for graduate students and university employees, and the ability to deduct interest on student loans.
However, certain provisions that remain, like one doubling the standard deduction for tax filers, are expected to curtail charitable giving to colleges, while others could lead to reductions in state funding for higher education.
Here, we examine certain provisions of the bill and their impact on students and higher education.
|Provision||Current tax code||Proposed legislation|
|Qualified tuition reductions
|Universities may provide tax-free tuition for graduate students who serve as research or teaching assistants, and for full-time employees, their children, and their spouses||The proposed bill makes no changes to the existing exemption|
|Student loan interest deduction
|Taxpayers may take an above-the-line deduction on interest payments made on qualified education loans||The proposed bill makes no changes to the existing exemption|
|Qualified tuition payments deduction||Taxpayers who earn less than $80,000 may take an above-the-line deduction for qualified tuition and related education expenses paid by the taxpayer||The proposed bill makes no changes to the existing exemption|
|Employer tuition assistance||Employer provided education expenses are excluded from taxable income||The proposed bill makes no changes to the existing exemption|
|Standard deduction||Taxpayers may itemize their deductions or take a standard deduction, currently valued at $12,700 for a married couple||The proposed bill roughly doubles the standard deduction, likely increasing the number of taxpayers who take the standard deduction and thereby discouraging charitable giving|
|American Opportunity Tax Credit, Hope Scholarship Credit, and Lifelong Learning Credit||These are tax credits for qualified students for the payment of certain education-related expenses||The proposed bill makes no changes to the existing exemption|
|Excise tax on endowments
|Colleges and universities with endowments valued at more than $500,000 per full-time student will be subject to an excise tax of 1.4 percent on net investment income|
|Research income||The proposed bill makes no changes to the existing treatment of research income|
|Advance refunding bonds||Interest received on advance refunding bonds, which universities use to refinance tax-exempt debt if lower interest rates become available, is currently excluded from taxable income||The proposed bill repeals the existing exclusion for interest received on advance refunding bonds|