Tax Benefits for Students and Families
NAICU strongly supports the current three-tiered structure of higher education tax benefits, including benefits that help families save for college, pay tuition, and repay student loans.
A frequent criticism is that there are too many confusing and duplicative tuition tax benefits. This was addressed when omnibus tax and spending legislation was signed into law in December 2015. That law made the American Opportunity Tax Credit (AOTC) permanent, and phased out the tuition deduction. The permanent AOTC also replaces the Hope Tax Credit, and is more generous. Since the AOTC is only available for the first four years of higher education, the Lifetime Learning credit remains in place to help graduate students and lifetime learners.
In December 2017, Congress passed the Tax Credits and Jobs Act of 2017 (TCJA). While the final bill preserved all of the current higher education tax benefits for students and families, almost all of the provisions were at risk during the process. In addition, Congress reached a short-term budget agreement in early 2018 that included extensions of expired or expiring tax provisions, and the tuition deduction was reinstated retroactively for 2017.