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Washington Highlights

Fiscal Cliff Agreement Includes Education Tax Extenders

January 4, 2013—President Obama Jan. 2 signed the Taxpayer Relief Act of 2012 (H.R. 8) into law, extending a number of expiring tax provisions as part of the final deal to avert the “fiscal cliff.”  The agreement includes the extension of several tax benefits of importance to higher education and academic medicine. 

Among other provisions, the new law permanently:

  • Exempts from taxation scholarships offered by the National Health Service Corps (NHSC) and the U.S. Armed Forces;

  • Expands the Student Loan Interest Deduction (SLID) eligible income phase out to between $55,000 and $70,000 ($110,000 and $140,000 for joint filers); and

  • Extends the 2001 expansions of Coverdell Education Savings Accounts and employer-provided educational assistance.

The law extends for 5 years (through 2017) the $2,500 per year American Opportunity Tax Credit (AOTC) for tuition and related expenses. The new law also extends through 2013 the above-the-line deduction for qualified tuition-related expenses.

Similar to the Senate Finance bill approved in August [see Washington Highlights, Aug. 3], the new law extends for two years (through 2013) the Research and Experimentation tax credit “equal to 20 percent of the amount by which a taxpayer’s qualified research expenses for a taxable year exceed its base amount for that year and provides an alternative simplified credit of 14 percent.”

The new law also extends for two years the provision that allows for tax-free distributions to charities from an Individual Retirement Arrangement (IRA). The law includes a transition rule to help account for charitable contributions missed since the Dec. 31, 2011, expiration of the provision.


Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806