Senate Finance Committee ranking member Charles Grassley, R-Iowa, has introduced a bill that would make permanent a number of education-related tax relief measures dating back to 2001, when he was committee chairman, and increase others.
The bill he introduced Tuesday would make permanent all the education tax provisions in the 2001 tax relief bill, including elimination of a 60-month limit and an increase on the income limitation on the student loan interest deduction.
Other measures that would be made permanent include the above-the-line deduction for higher education expenses; the exclusion for employer-provided educational assistance; the $2,000 contribution limit and income phase-out limits for Education Savings Accounts; the ability to claim the Hope and Lifetime Tax Credits in the same year the taxpayer claims an exclusion from an Education Savings Account; and exclusion of assistance received under the National Health Service Corps Scholarship Program and the F. Edward Herbert Armed Forces Health Professional Scholarship and Financial Assistance Program.
The bill would also make permanent other provisions in the 2001 bill, including the deduction for classroom supplies and related expenses of elementary and secondary school teachers, better known as the school teacher deduction. Qualified-zone academy bonds would also be made permanent. The bonds can be used for school renovations and repairs, except new construction, allowing schools to save up to 50 percent of the costs of such improvement projects.
Other provisions that would be made permanent include qualified school-construction bonds, which offer tax credits in place of interest payments; and the allowance of computer technology and equipment as a qualified higher education expense for Section 529 accounts.
Grassley also wants to make permanent and expand the American Opportunity Tax Credit for education. The bill would increase the tax credit amount from $2,500 to $3,000 and make it permanent policy.
Grassley is also working to extend the tax provisions he authored for students affected by floods in the Midwest in 2008. The legislation provided $121 million in education assistance to students attending undergraduate or graduate institutions affected by the floods. The law doubled the Hope Credit dollar amounts for affected students, making the maximum credit $3,000, and doubled the Lifetime Learning Credit percentage from 20 percent to 40 percent, for a maximum Lifetime Learning Credit of $4,000 for students attending undergraduate or graduate institutions in the Midwestern disaster area.
Grassley said he would work with other lawmakers to consider his legislation as Congress moves forward to extend other expiring tax provisions.
