[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2877 Introduced in House (IH)]
104th CONGRESS
2d Session
H. R. 2877
To amend the Internal Revenue Code of 1986 to allow a deduction for the
payment of tuition for higher education and interest on student loans.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 24, 1996
Mr. McHale introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a deduction for the
payment of tuition for higher education and interest on student loans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Higher Education Tax Relief Act of
1996''.
SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES.
(a) Deduction Allowed.--Part VII of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 220 as
section 221 and by inserting after section 219 the following new
section:
``SEC. 220. HIGHER EDUCATION TUITION AND FEES; INTEREST ON STUDENT
LOANS.
``(a) Allowance of Deduction.--In the case of an individual, there
shall be allowed as a deduction an amount equal to the sum of--
``(1) the qualified higher education expenses, plus
``(2) interest on qualified higher education loans,
paid by the taxpayer during the taxable year.
``(b) Qualified Higher Education Expenses.--For purposes of this
section--
``(1) Qualified higher education expenses.--
``(A) In general.--The term `qualified higher
education expenses' means tuition and fees required for
the enrollment or attendance of--
``(i) the taxpayer,
``(ii) the taxpayer's spouse, or
``(iii) any dependent of the taxpayer with
respect to whom the taxpayer is allowed a
deduction under section 151,
as an eligible student at an institution of higher
education.
``(B) Exception for education involving sports,
etc.--Such term does not include expenses with respect
to any course or other education involving sports,
games, or hobbies unless such expenses--
``(i) are part of a degree program, or
``(ii) are deductible under this chapter
without regard to this section.
``(C) Exception for nonacademic fees.--Such term
does not include any student activity fees, athletic
fees, insurance expenses, or other expenses unrelated
to a student's academic course of instruction.
``(D) Eligible student.--For purposes of
subparagraph (A), the term `eligible student' means a
student who meets the requirements of section 484(a)(1)
of the Higher Education Act of 1965 (20 U.S.C.
1091(a)(1)).
``(2) Dollar limitation.--
``(A) In general.--The amount taken into account
under paragraph (1) for any taxable year shall not
exceed $10,000.
``(B) Phase-in.--In the case of taxable years
beginning in 1996, 1997, 1998, and 1999, the following
amounts shall be substituted for `$10,000' in
subparagraph (A):
``For taxable years
The substitute
beginning in:
amount is:
1996....................... $2,000
1997....................... 4,000
1998....................... 6,000
1999....................... 8,000.
``(3) Limitation based on modified adjusted gross income.--
``(A) In general.--If the modified adjusted gross
income of the taxpayer for the taxable year exceeds
$70,000 ($100,000 in the case of a joint return), the
amount which would (but for this paragraph) be taken
into account under paragraph (1) shall be reduced (but
not below zero) by the amount which bears the same
ratio to the amount which would be taken into account
as such excess bears to $20,000.
``(B) Inflation adjustment.--In the case of any
taxable year beginning in a calendar year after 1996,
the $70,000 and $100,000 amounts contained in
subparagraph (A) shall be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment under
section 1(f)(3) for the calendar year in which
the taxable year begins, except that section
1(f)(3)(B) shall be applied by substituting
`1995' for `1992'.
``(C) Rounding.--If any amount as adjusted under
subparagraph (B) is not a multiple of $50, such amount
shall be rounded to the nearest multiple of $50 (or if
such amount is a multiple of $25, such amount shall be
rounded to the next highest multiple of $50).
``(D) Modified adjusted gross income.--The term
`modified adjusted gross income' means the adjusted
gross income of the taxpayer for the taxable year
determined--
``(i) without regard to this section and
sections 911, 931, and 933, and
``(ii) after the application of sections
86, 135, 219, and 469.
``(4) Institution of higher education.--The term
`institution of higher education' means an institution which--
``(A) is described in section 481 of the Higher
Education Act of 1965 (20 U.S.C. 1088), and
``(B) is eligible to participate in programs under
title IV of such Act.
``(c) Qualified Higher Education Loan.--For purposes of this
section--
``(1) In general.--The term `qualified higher education
loan' means a loan to a student which is--
``(A) made, insured, or guaranteed by the Federal
Government,
``(B) made by a State or a political subdivision of
a State,
``(C) made from the proceeds of a qualified student
loan bond under section 144(b), or
``(D) made by an institution of higher education
(as defined in section 1201(a) of the Higher Education
Act of 1965 (20 U.S.C. 1141(a))).
``(2) Limitation.--
``(A) In general.--The amount of interest on a
qualified higher education loan which is taken into
account under subsection (a)(2) shall be reduced by the
amount which bears the same ratio to such amount of
interest as--
``(i) the proceeds from such loan used for
qualified higher education expenses, bears to
``(ii) the total proceeds from such loan.
``(B) Qualified higher education expenses.--For
purposes of subparagraph (A), the term `qualified
higher education expenses' has the meaning given such
term by subsection (b), except that--
``(i) such term shall include reasonable
living expenses while away from home, and
``(ii) the limitations of paragraphs (2)
and (3) of subsection (b) shall not apply.
``(d) Coordination With Other Provisions.--
``(1) No double benefit.--
``(A) In general.--No deduction shall be allowed
under subsection (a) for qualified higher education
expenses or interest on qualified higher education
loans with respect to which a deduction is allowed
under any other provision of this chapter.
``(B) Savings bond exclusion.--A deduction shall be
allowed under subsection (a)(1) for qualified higher
education expenses only to the extent the amount of
such expenses exceeds the amount excludable under
section 135 for the taxable year.
``(2) Qualified residence interest.--If a deduction is
allowed under subsection (a)(2) for interest which is also
qualified residence interest under section 163(h), such
interest shall not be taken into account under section 163(h).
``(e) Special Rules.--
``(1) Election.--If a deduction is allowable under more
than one provision of this chapter with respect to qualified
higher education expenses, the taxpayer may elect the provision
under which the deduction is allowed.
``(2) Limitation on taxable year of deduction.--
``(A) In general.--A deduction shall be allowed
under subsection (a)(1) for any taxable year only to
the extent the qualified higher education expenses are
in connection with attendance at an institution of
higher education during the taxable year.
``(B) Certain prepayments allowed.--Subparagraph
(A) shall not apply to qualified higher education
expenses paid during a taxable year which are in
connection with attendance at an institution of higher
education which begins during the first 2 months of the
following taxable year.
``(3) Adjustment for certain scholarships and veterans
benefits.--The amount of qualified higher education expenses
otherwise taken into account under subsection (a)(1) with
respect to the education of an individual shall be reduced
(before the application of subsection (b)) by the sum of the
amounts received with respect to such individual for the
taxable year as--
``(A) a qualified scholarship which under section
117 is not includable in gross income,
``(B) an educational assistance allowance under
chapter 30, 31, 32, 34, or 35 of title 38, United
States Code, or
``(C) a payment (other than a gift, bequest,
devise, or inheritance within the meaning of section
102(a)) for educational expenses, or attributable to
attendance at an eligible educational institution,
which is exempt from income taxation by any law of the
United States.
``(4) No deduction for married individuals filing separate
returns.--If the taxpayer is a married individual (within the
meaning of section 7703), this section shall apply only if the
taxpayer and his spouse file a joint return for the taxable
year.
``(5) Regulations.--The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out
this section, including regulations requiring recordkeeping and
information reporting.''
(b) Deduction Allowed in Computing Adjusted Gross Income.--Section
62(a) of such Code is amended by inserting after paragraph (15) the
following new paragraph:
``(16) Higher education tuition and fees.--The deduction
allowed by section 219.''
(c) Conforming Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 220 and inserting:
``Sec. 220. Higher education tuition and
fees.
``Sec. 221. Cross reference.''
(d) Effective Dates.--The amendments made by this section shall
apply to taxable years beginning after December 31, 1995.
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