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What the Final Tax Bill Means for Northeastern

Updates

  • December 15, 2017: Article in the Chronicle of Higher Education about the FINAL tax bill
  • December 13, 2017: Article in the Chronicle of Higher Education about outcome of committee deliberations
  • December 7, 2017: Article in the Chronicle of Higher Education about tax reform bill while in committee
  • November 18, 2017: Email sent from Provost Bean to all graduate students

Republican lawmakers on Friday released the final version of their tax reform bill and appear on track to hold floor votes on the legislation this week.

If majorities in both the House of Representatives and the Senate approve the bill, President Donald Trump is expected to sign it.

The final bill is largely consistent with the prior Senate bill, providing tax cuts for businesses, temporary tax benefits for low- and middle-income citizens, and a new top tax rate for wealthy Americans.

The bill does restore some tax breaks that had been slated for elimination in the previous House version of the bill, including tax-free tuition waivers for graduate students and university employees, and the ability to deduct interest on student loans.

However, certain provisions that remain, like one doubling the standard deduction for tax filers, are expected to curtail charitable giving to colleges, while others could lead to reductions in state funding for higher education.

Here, we examine certain provisions of the bill and their impact on students and higher education.

ProvisionCurrent tax codeProposed legislation
Qualified tuition reductions Universities may provide tax-free tuition for graduate students who serve as research or teaching assistants, and for full-time employees, their children, and their spousesThe proposed bill makes no changes to the existing exemption
 
Student loan interest deduction Taxpayers may take an above-the-line deduction on interest payments made on qualified education loansThe proposed bill makes no changes to the existing exemption
 
Qualified tuition payments deductionTaxpayers who earn less than $80,000 may take an above-the-line deduction for qualified tuition and related education expenses paid by the taxpayerThe proposed bill makes no changes to the existing exemption
 
Employer tuition assistanceEmployer provided education expenses are excluded from taxable incomeThe proposed bill makes no changes to the existing exemption
 
Standard deductionTaxpayers may itemize their deductions or take a standard deduction, currently valued at $12,700 for a married coupleThe proposed bill roughly doubles the standard deduction, likely increasing the number of taxpayers who take the standard deduction and thereby discouraging charitable giving
 
American Opportunity Tax Credit, Hope Scholarship Credit, and Lifelong Learning CreditThese are tax credits for qualified students for the payment of certain education-related expensesThe proposed bill makes no changes to the existing exemption
 
Excise tax on endowments Colleges and universities with endowments valued at more than $500,000 per full-time student will be subject to an excise tax of 1.4 percent on net investment income
 
Research incomeThe proposed bill makes no changes to the existing treatment of research income
 
Advance refunding bondsInterest received on advance refunding bonds, which universities use to refinance tax-exempt debt if lower interest rates become available, is currently excluded from taxable incomeThe proposed bill repeals the existing exclusion for interest received on advance refunding bonds
Originally Published at News@Northeastern by Northeastern News Read More