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Congress Considers Updates to the Tax Cuts and Jobs Act

June 28, 2019

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PRESS CONTACTS
Matthew Shick, Sr. Director, Gov't Relations & Regulatory Affairs
Brett Roude, Legislative Analyst

The AAMC June 21 joined the higher education community in urging Senate leadership to pass the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act, H.R. 1994) and the Tax Relief for Student Success Act (S. 1667). Both bills contain provisions intended to correct changes that were made to the “kiddie tax” in the Tax Cuts and Jobs Act of 2017 (TCJA, P.L. 115-97) [See Washington Highlights, Dec. 22, 2017]. The House May 23 passed the SECURE Act, 417-3.

The TCJA inadvertently changed how nontuition scholarships and grants (such as room and board) are taxed, using the rates for trusts and estates, which are substantially higher and compressed compared to marginal tax rates. The bills amend the TCJA by taxing scholarships and grants for nontuition expenses for college students under the age of 24 at their parents’ marginal rate. The letter notes how the current tax structure “negatively impacts low-income students who receive scholarships or grants, with their families being taxed at substantially higher rates.”

Meanwhile, the House Ways and Means Committee June 20 marked-up and approved, 22-19, the Economic Mobility Act (H.R. 3300), which includes provisions that repeal the “parking tax.”

For nonprofit tax-exempt universities and hospitals, the TCJA made transportation fringe benefits and parking facilities taxable as unrelated business income, which is known as the “parking tax.” Nonprofit tax-exempt universities and hospitals now pay a tax on qualified transportation benefits, including in cities where employers are required by law to offer tax-free public transportation benefits to their employees.

It is unclear if the Economic Mobility Act will be brought to the House floor.

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