Student Loan Repayment Act of 2016

Summary: Student Loan Repayment Act of 2016  This bill amends the Internal Revenue Code to allow a work opportunity tax credit for employers who hire a qualified student loan repayer. A &quot;qualified student loan repayer&quot; is any individual who is certified by the designated local agency as: (1) having at least an associate's degree, and (2) having outstanding education loans of at least $10,000.  The bill also allows a business tax credit equal to 50% of the student loan program startup costs paid by employers during the year, subject to a limit of $500 per employee participating in the program. The credit applies to the ordinary and necessary expenses for the establishment or administration of a student loan repayment plan through which the employer provides specified annual matching contributions to each employee. The credit does not apply to payments made to, or on behalf of, any employee pursuant to the plan. An employer may claim the credit for three years if the employer has not established or maintained a plan for substantially the same employees during the three-year period immediately preceding the first year in which the credit is otherwise allowable. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Repayment Act of 
2016''.

SEC. 2. INCLUSION OF STUDENT LOAN REPAYERS FOR PURPOSES OF WORK 
              OPPORTUNITY CREDIT.

    (a) In General.--Section 51(d)(1) of the Internal Revenue Code of 
1986 is amended by striking ``or'' at the end of subparagraph (I), by 
striking the period at the end of subparagraph (J) and inserting ``, 
or'', and by adding at the end the following new subparagraph:
                    ``(K) a qualified student loan repayer.''.
    (b) Qualified Student Loan Repayer Defined.--Section 51(d) of such 
Code is amended by adding at the end the following new paragraph:
            ``(16) Qualified student loan repayer.--The term `qualified 
        student loan repayer' means any individual who is certified by 
        the designated local agency as--
                    ``(A) having at least an associate's degree; and
                    ``(B) having outstanding qualified education loans 
                (as defined in section 221) of not less than 
                $10,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to individuals who begin work for the employer after 
the date of the enactment of this Act.

SEC. 3. STUDENT LOAN PROGRAM STARTUP COSTS CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SECTION 45S. STUDENT LOAN PROGRAM STARTUP COSTS CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible employer, the student loan program startup costs credit 
determined under this section for any taxable year is an amount equal 
to 50 percent of the qualified startup costs paid or incurred by the 
taxpayer during the taxable year.
    ``(b) Dollar Limitation.--The amount of the credit determined under 
this section for any taxable year for a qualified employer shall not 
exceed--
            ``(1) for the first credit year and each of the 2 taxable 
        years immediately following the first credit year, the product 
        of--
                    ``(A) $500, multiplied by
                    ``(B) the number of employees participating during 
                such taxable year in an eligible employer plan for 
                which the employer is eligible for a credit under this 
                section, and
            ``(2) for any other taxable year, zero.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' means an employer if such employer, or any member 
of any controlled group including the employer (or any predecessor of 
either), during the 3-taxable-year period immediately preceding the 1st 
taxable year for which the credit under this section is otherwise 
allowable for a qualified employer plan of the employer, has not 
established or maintained a qualified employer plan with respect to 
which contributions were made, or benefits were accrued, for 
substantially the same employees as are in the qualified employer plan.
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Qualified startup costs.--
                    ``(A) In general.--The term `qualified startup 
                costs' means any ordinary and necessary expenses of an 
                eligible employer which are paid or incurred in 
                connection with the establishment or administration of 
                an eligible employer plan. Such term shall not include 
                any payment made to, or on behalf of, any employee 
                pursuant to such plan.
                    ``(B) Plan must have at least 1 participant.--Such 
                term shall not include any expense in connection with a 
                plan that does not have at least 1 employee eligible to 
                participate who is not a highly compensated employee.
            ``(2) Eligible employer plan.--The term `eligible employer 
        plan' means a student loan repayment plan administered by an 
        employer through which the employer provides, for each employee 
        for each year, qualified matching contributions.
            ``(3) Qualified matching contribution.--The term `qualified 
        matching contribution' means an employer contribution made to 
        an eligible employer plan on behalf of an employee on account 
        of an employee contribution made by such employee if such 
        employer contribution is at least the lesser of--
                    ``(A) the amount of such employee contribution, and
                    ``(B) $2,000.
            ``(4) First credit year.--The term `first credit year' 
        means--
                    ``(A) the taxable year which includes the date that 
                the eligible employer plan to which such costs relate 
                becomes effective, or
                    ``(B) at the election of the eligible employer, the 
                taxable year preceding the taxable year referred to in 
                subparagraph (A).
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
        subsection (m) or (o) of section 414, shall be treated as one 
        person. All eligible employer plans shall be treated as 1 
        eligible employer plan.
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowed for that portion of the qualified startup costs paid or 
        incurred for the taxable year which is equal to the credit 
        determined under subsection (a).
            ``(3) Deduction for matching contribution.--For deductions 
        for qualified matching contributions, see section 162.
            ``(4) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.''.
    (b) Conforming Amendments.--
            (1) In general.--Subsection (b) of section 38 is amended by 
        striking ``plus'' at the end of paragraph (35), by striking the 
        period at the end of paragraph (36) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(37) the student loan program startup costs credit 
        determined under section 45S(a).''.
            (2) Deduction for unused credit.--Subsection (c) of section 
        196 is amended by striking ``and'' at the end of paragraph 
        (13), by striking the period at the end of paragraph (14) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
                    ``(15) the student loan program startup costs 
                credit determined under section 45S(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 45S. Student loan program startup costs credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2016.