Tuition Tax Credit Act of 1995

Summary: Tuition Tax Credit Act of 1995 - Amends the Internal Revenue Code to allow a nonrefundable individual income tax credit for the educational expenses (tuition and supplies) of the taxpayer, spouse, or dependents at an eligible private elementary or secondary school, institution of higher education, or vocational school.  Limits the credit to $1,000 per student per year.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tuition Tax Credit Act of 1995''.

SEC. 2. TAX CREDIT FOR TUITION.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25 the 
following new section:

``SEC. 25A. TUITION TAX CREDIT.

    ``(a) General Rule.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year, the amount, determined under subsection (b), of the 
educational expenses paid by him during the taxable year to one or more 
eligible educational institutions for himself, his spouse, or any of 
his dependents (as defined in section 152).
    ``(b) Limitations.--
            ``(1) Amount per individual.--The credit under subsection 
        (a) for the educational expenses of any individual paid in any 
        taxable year shall be equal to so much of such expenses paid 
        with respect to such individual as does not exceed $1,000.
            ``(2) Proration of credit where more than one taxpayer pays 
        expenses.--If educational expenses of an individual are paid by 
        more than one taxpayer during any calendar year, the credit 
        allowable to each such taxpayer under subsection (a) for any 
        taxable year beginning in such calendar year shall be the same 
        portion of the credit determined under paragraph (1) for such 
        calendar year which the amount of educational expenses of such 
        individual paid by the taxpayer during such calendar year is of 
        the total amount of educational expenses of such individual 
        paid during such calendar year by all such taxpayers.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Educational expenses.--The term `educational 
        expenses' means amounts paid for--
                    ``(A) tuition and fees required for the enrollment 
                or attendance of a student at an eligible educational 
                institution, and
                    ``(B) fees, books, supplies, and equipment required 
                for courses of instruction at an eligible educational 
                institution.
        Such term does not include any amount paid, directly or 
        indirectly, for meals, lodging, or similar personal, living, or 
        family expenses. In the event an amount paid for tuition or 
        fees includes an amount for meals, lodging, or similar expenses 
        which is not separately stated, the portion of such amount 
        which is attributable to meals, lodging, or similar expenses 
        shall be determined under regulations prescribed by the 
        Secretary.
            ``(2) Eligible educational institution.--The term `eligible 
        educational institution' means--
                    ``(A) an institution of higher education,
                    ``(B) a vocational school,
                    ``(C) a secondary school, or
                    ``(D) an elementary school.
            ``(3) Institution of higher education.--The term 
        `institution of higher education' means the institutions 
        described in section 1201(a) or 481(a) of the Higher Education 
        Act of 1965.
            ``(4) Vocational school.--The term `vocational school' 
        means an area vocational education school as defined in section 
        521(3) of the Carl D. Perkins Vocational Education Act.
            ``(5) Elementary and secondary schools.--The terms 
        `elementary school' and `secondary school' mean, respectively, 
        any elementary or secondary school (as defined in paragraph (7) 
        of section 198(a) of the Elementary and Secondary Education Act 
        of 1965) which is privately operated but only if it is--
                    ``(A) accredited or approved under State law (or, 
                in the case of school in a State which has no procedure 
                for the accreditation or approval of privately operated 
                schools, which meets the requirements of State law 
                relating to compulsory school attendance), and
                    ``(B) exempt from taxation under section 501(a) as 
                an organization described in section 501(c)(3).
        The terms `elementary school' and `secondary school' include 
        facilities which offer education for individuals who are 
        physically or mentally handicapped as a substitute for public 
        elementary or secondary education.
    ``(d) Special Rules.--
            ``(1) Adjustment for certain scholarships and veterans 
        benefits.--The amounts otherwise taken into account under 
        subsection (a) as educational expenses of any individual during 
        any period shall be reduced (before the application of 
        subsection (b)) by any amounts received by such individual 
        during such period as--
                    ``(A) a qualified scholarship (within the meaning 
                of section 117(b)) which under section 117 is not 
                includible in gross income, or
                    ``(B) an educational assistance allowance under 
                chapters 32, 34, or 35 of title 38 of the United States 
                Code.
            ``(2) Eligible courses.--Amounts paid for educational 
        expenses of any individual shall be taken into account under 
        subsection (a) only to the extent such expenses--
                    ``(A) are attributable to courses of instruction 
                offered by an elementary or secondary school, or
                    ``(B) are attributable to courses of instruction 
                for which credit is allowed toward a baccalaureate 
                degree by an institution of higher education or toward 
                a certificate of required course work at a vocational 
                school and are not attributable to any graduate program 
                of such individual.
            ``(3) Individual must be at least half-time student.--No 
        credit shall be allowed under subsection (a) for amounts paid 
        during the taxable year for educational expenses with respect 
        to any individual unless that individual, during any 4 calendar 
        months during the calendar year in which the taxable year of 
        the taxpayer begins, is at least a half-time student at an 
        eligible education institution.
            ``(4) Spouse.--No credit shall be allowed under subsection 
        (a) for amounts paid during the taxable year for educational 
        expenses for the spouse of the taxpayer unless--
                    ``(A) the taxpayer is entitled to an exemption for 
                his spouse under section 151(b) for the taxable year, 
                or
                    ``(B) the taxpayer files a joint return with his 
                spouse for the taxable year.
    ``(e) Disallowance of Expenses as Deduction.-- No deduction shall 
be allowed under section 162 (relating to trade or business expenses) 
for any educational expense which (after the application of subsection 
(b)) is taken into account in determining the amount of any credit 
allowed under subsection (a). The preceding sentence shall not apply to 
the educational expenses of any taxpayer who, under regulations 
prescribed by the Secretary, elects not to apply the provisions of this 
section with respect to such expenses for the taxable year.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the provisions of this section.''
    (b) Clerical Amendment.--The table of sections for such subpart A 
is amended by inserting after the item relating to section 25 the 
following new item:

                              ``Sec. 25A. Expenses of higher 
                                        education.''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1995.