The Tax Cuts and Jobs Act, introduced on Thursday by House Republicans, includes provisions to provide tax relief to those with education expenses.
The current tax code includes roughly 100 pages for Americans to understand which tax benefits help them with college costs. The bill introduced yesterday aims to streamline this process to give tax relief to those trying to get a better education.
Specifically, the bill preserves the American Opportunity Tax Credit, which is what families can use to rein in college costs. The legislation also allows taxpayers to use 529 accounts to eliminate using two separate accounts and gives them more flexibility in how they save.
"While expanding these benefits, the Tax Cuts and Jobs Act would also simplify the code by eliminating the exclusion for qualified tuition reductions, education savings bonds, and the limited current law student loan interest deduction," the House Ways and Means Committee explained.
Inez Feltscher Stepman, director at the Education and Workforce Development at ALEC, said it was an unexpected surprise to see the proposed tax framework promote important changes in education.
"This is a huge boon to middle-class families," she said. "If this tax provision passes, they will be able to more easily finance the individualized education their children need and deserve."
"This tax proposal realigns our education priorities by giving families more ways to access the best possible schools for their children," Stepman said. "In addition to saving for colleges through 529 investment accounts, families will be able to spend money from this account on K-12 educational expenses such as tutoring, online learning, private school tuition, special needs learning therapy, and more."
"This tax plan recognizes that not all students should track through an identical college pipeline. It opens up vocational education training and moves away from high-cost, low-value four-year degrees," she said.