The National Association of College and University Business Officers (NACUBO) has published a summary of the provisions affecting higher education in the comprehensive draft tax bill released on February 26 by US House Ways and Means Committee Chairman Dave Camp (R-MI). The package takes aim at deductions for mortgage interest and for state and local property taxes, as well as charitable contributions.
The proposal includes many items that would profoundly impact higher education. It would repeal the deduction for interest on student loans, the deduction for qualified tuition and expenses, and the Lifetime Learning tax credit. It would also stop contributions to Coverdell education savings accounts reduce eligibility for the American Opportunity Tax Credit and restrict the maximum age of students for tax purposes to 18, reducing tax breaks for full-time students in higher education.
On the employment side, the FICA (Social Security tax) exemption for student earnings would be greatly reduced. The tax exclusion for employees of educational institutions and other public entities would be limited to $50,000 ($25,000 for a married individual filing a joint return) and would be limited to one residence. It would also stop universities from providing tax-free educational assistance to some employees.
Elsewhere, the research tax credit would be reworked and given permanent status. Meanwhile, tax breaks would be withheld from research that is not made publicly available. A special rule that provides a charitable deduction of 80 percent of the amount paid for the right to purchase tickets for athletic events would be repealed. Tax reductions on scholarships would be cut.
Wholesale adoption of these proposals is not considered likely; however, the proposal is important as a summary of priorities from congressional Republicans as a counterpart to the Obama Administration's concurrent release of its Fiscal Year 2015 budget proposal. Last week in a hearing, Chairman Camp indicated he may separate consideration of some of the higher education provisions for further consideration this year.