NAICU Washington Update

Education Benefits Could be at Risk as House Works on Second Tax Bill

May 10, 2018

House Ways and Means Chairman Kevin Brady (R-TX) announced that committee staff are working on the details of a second tax bill that would follow on the heels of the Tax Cuts and Jobs Act (TCJA) that was signed into law late last year.  The second major tax bill being pushed by the House will make technical corrections to TCJA, make the TCJA provisions permanent, and will aim to make the tax code “family friendly” by “streamlining education provisions.”
Chairman Brady indicated the bill would “take about 14 different education savings plans and look to streamline them into three or four that are more consumer friendly and are more flexible.”  While there are not currently 14 different savings plans, the Chairman was likely referring to the benefits that help families save for college, pay tuition, and repay loans.  There are currently seven tax benefits that assist students and families at each stage of their college education process.  All of which were preserved by Congress in the final TCJA.
Chairman Brady added that Republican lawmakers are considering proposals that were included in the original tax reform blueprint, which included simplifying overlapping tax benefits related to education. The blueprint proposed consolidating the educational tax provisions to create a package of tax benefits that would cover both college and vocational training programs, including saving incentives such as 529 plans.
The House version of TCJA proposed the elimination of almost all of the student and family benefits, rather than consolidating them.  The Senate version kept those benefits in place, which lead to the final package that preserved all of the current benefits.  It’s likely that a second tax bill will revisit the original TCJA House proposal.
The proposed package is also expected to include tax relief targeted at helping low- and middle-income families deal with the cost of higher education, although there are no further details on how those benefits might work.
Timing of the bill is uncertain.  Chairman Brady indicated that work will continue on the bill through the month of May.  There is no current indication that the Senate is working on similar legislation, however, or if it plans to ultimately consider the House bill.

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