Ways and Means Committee Approves $2,500 Tax Credit for Tuition and Textbooks
Washington, D.C. – U.S. Congressman Lloyd Doggett (D-Texas) and Congressman Tom Perriello (D-Virginia) today welcomed House Ways and Means Committee approval of a tuition and textbook tax credit in the American Recovery and Reinvestment Tax Act of 2009. (H.R. 598). This higher education tax credit is drawn from legislation they filed earlier this year.
Rep. Doggett, said: “This week begins a new Administration and, on many campuses, a new semester. For families and students facing mounting tuition and textbook costs, help is on the way. I am particularly pleased that the cost of course materials, including textbooks, are for the first time, eligible for the tax credit. Also, for the first time, up to $1,000 of the credit is refundable – meaning more working families can seize the opportunity higher education provides.”
Rep. Perriello said: “I’m thrilled our legislation is moving forward quickly, because families need relief right now to cover the skyrocketing cost of higher education during these tough times. Regaining America’s competitive advantage is not an overnight project so we cannot afford to postpone the long-term investments in our workforce that only education and training can provide. This effort is particularly important during a recession when those out of work could use the time to attend a community college or university to prepare for the new job market. A smart recovery must be about investing in our future, and this effort will make it easier for all Americans be part of the solution.”
For 2009 and 2010, H.R. 598 provides taxpayers with a new American Opportunity Tax Credit of up to $2,500 of the cost of tuition and related expenses paid during the taxable year. The American Opportunity Tax Credit would replace the Hope Tax Credit and the above-the-line tuition tax deduction for the next two years. For the first time, textbooks would be included in the higher education expenses that would be eligible for the tax credit. Forty percent of the tax credit – up to $1000 – would be refundable. This tax credit will be subject to a phase-out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly). This will provide an estimated $13.5 billion in tax relief.
Two weeks ago, Reps Doggett and Perriello filed their bill, the College Learning Access, Simplicity, and Savings Act (H.R. 386), to make it easier for students and parents to claim tax credits for higher education expenses. A study released yesterday by the Center on Budget and Policy Priorities found that these improvements to the higher-education tax credits are particularly important given the current recession. The study may be accessed here: http://www.cbpp.org/1-21-09tax2.pdf.
