Black and Davis Unveil the Student and Family Tax Simplification Act

Oct 30, 2013 Issues: Education, Tax Reform

(Washington, DC )  Today, Representatives Diane Black (R-TN) and Danny K. Davis (D-IL) introduced the Student and Family Tax Simplification Act. The legislation is designed to make it easier and simpler for families to afford the costs of higher education by consolidating four separate tax provisions into one improved and more robust education tax benefit.

“Streamlining the number of education provisions and retooling those that are most effective allows us to simplify the code and reduce some of the confusion that exists in the tax code today,” said Congressman Black. “As a result, students can spend less time figuring out how to finance the cost of a higher education and more time developing the skills they need to succeed in a knowledge-based economy. Our bipartisan bill makes commonsense reforms to make the tax code simpler and fairer when it comes to helping Americans afford the cost of a college education.”

“Education is key to the economic well-being of our citizens and our democracy,” said Congressman Davis. “This bipartisan bill simplifies our tax code and strengthens our investment in students and their families, expanding aid for the lowest-income students.  The improvements within the bill will help increase college affordability, access, and completion.” 

The legislation consolidates four existing education provisions — the Hope Credit, the American Opportunity Tax Credit (AOTC), the Lifetime Learning Credit, and the tuition deduction — into a single, modernized and strengthened AOTC.  The new AOTC, which would be permanent and partially refundable, would:

  • Provide a 100-percent tax credit for the first $2,000 of eligible higher education expenses and a 25-percent tax credit for the next $2,000 of such expenses (for a maximum credit of $2,500).
  • The first $1,500 of the credit would be refundable, meaning that families could receive the benefit regardless of whether they have Federal income tax liability. 
  • The credit could be used to offset expenses for tuition, fees and course materials. 
  • The credit would be available for up to four years of post-secondary education at qualifying four-year universities, community colleges, and trade and vocational schools.
  • The credit would begin to phase out for families with incomes between $86,000 and $126,000 (half those amounts for single individuals), ensuring that the credit provides the greatest benefit and value to low- and middle-income families.

Black and Davis began working on the issue of simplifying tax incentives for higher education earlier this year.  The two served as the Chair and Co-Chair of the Tax Reform Working Group on Education, one of 11 separate working groups established by Ways and Means Committee Chairman Dave Camp (R-MI) and Ranking Member Sandy Levin (D-MI).  The working groups were tasked with reviewing current law in their designated issue areas and then identifying, researching and compiling feedback related to the topic of the working group.

After reporting back to the committee, Black and Davis continued working together, resulting in today’s introduction of the Student and Family Tax Simplification Act. Click here to read the bill text.