UNIVERSITY PARK, Pa. – The finalized version of proposed tax reform changes that Congress has passed will preserve nearly all of the education-related tax benefits that help to promote educational access and affordability.
“I want to applaud the tireless efforts of many people, particularly our government and community relations team, as well as faculty, alumni and everyone who spoke up to let our elected representatives know how vital support of higher education is to individuals and in the prosperity of our nation,” said Nick Jones, provost and executive vice president. “Without the overwhelming support of our extended community at Penn State and institutions across country, the ability of students to attend college and afford an education could have been severely hampered.”
The tax reform proposal preserves numerous existing education-related tax benefits, including preserving the current law that excludes tuition reductions from taxable income for graduate teaching and research assistants.
Jones said, “The significant support our Vice Provost for Graduate Education and Dean of the Graduate School Jean Vasilatos-Younken, faculty and our graduate students, was instrumental in keeping that benefit in place.”
The tax plan also keeps in place:
- The Student Loan Interest Deduction: Borrowers will continue to be allowed to deduct up to $2,500 in student loan interest
- Qualified Tuition Reductions: Employee tuition reductions will continue to be excluded from taxable income tuition reductions
- American Opportunity Tax Credit: Individuals will still be able to receive a tax credit of up to $2,500 per year for qualified tuition and related expenses
- Lifetime Learning Credit: Generally provides a credit of up to $2,000 per taxpayer for qualified tuition and related expenses
- Educational Assistance Programs: Employees may exclude up to $5,250 of educational assistance provided by an employer
A tax provision that allowed for an above-the-line deduction for qualified tuition and related expenses for higher education up to $4,000 expired beginning on Jan. 1, 2017. Congress has decided not to reauthorize this provision.