I

104TH CONGRESS

1ST SESSION H. R. 156

To amend the Internal Revenue Code of 1986 to provide a Federal income

tax credit for tuition.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. SOLOMON introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

a Federal income tax credit for tuition.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Tuition Tax Credit

5 Act of 1995’’.

6 SEC. 2. TAX CREDIT FOR TUITION.

7 (a) IN GENERAL.—Subpart A of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of

9 1986 (relating to nonrefundable personal credits) is
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1 amended by inserting after section 25 the following new

2 section:

3 ‘‘SEC. 25A. TUITION TAX CREDIT.

4 ‘‘(a) GENERAL RULE.—In the case of an individual,

5 there shall be allowed as a credit against the tax imposed

6 by this chapter for the taxable year, the amount, deter7 mined under subsection (b), of the educational expenses

8 paid by him during the taxable year to one or more eligible

9 educational institutions for himself, his spouse, or any of

10 his dependents (as defined in section 152).

11 ‘‘(b) LIMITATIONS.—

12 ‘‘(1) AMOUNT PER INDIVIDUAL.—The credit

13 under subsection (a) for the educational expenses of

14 any individual paid in any taxable year shall be

15 equal to so much of such expenses paid with respect

16 to such individual as does not exceed $1,000.

17 ‘‘(2) PRORATION OF CREDIT WHERE MORE

18 THAN ONE TAXPAYER PAYS EXPENSES.—If edu19 cational expenses of an individual are paid by more

20 than one taxpayer during any calendar year, the

21 credit allowable to each such taxpayer under sub22 section (a) for any taxable year beginning in such

23 calendar year shall be the same portion of the credit

24 determined under paragraph (1) for such calendar

25 year which the amount of educational expenses of
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1 such individual paid by the taxpayer during such

2 calendar year is of the total amount of educational

3 expenses of such individual paid during such cal4 endar year by all such taxpayers.

5 ‘‘(c) DEFINITIONS.—For purposes of this section—

6 ‘‘(1) EDUCATIONAL EXPENSES.—The term

7 ‘educational expenses’ means amounts paid for—

8 ‘‘(A) tuition and fees required for the en9 rollment or attendance of a student at an eligi10 ble educational institution, and

11 ‘‘(B) fees, books, supplies, and equipment

12 required for courses of instruction at an eligible

13 educational institution.

14 Such term does not include any amount paid, di15 rectly or indirectly, for meals, lodging, or similar

16 personal, living, or family expenses. In the event an

17 amount paid for tuition or fees includes an amount

18 for meals, lodging, or similar expenses which is not

19 separately stated, the portion of such amount which

20 is attributable to meals, lodging, or similar expenses

21 shall be determined under regulations prescribed by

22 the Secretary.

23 ‘‘(2) ELIGIBLE EDUCATIONAL INSTITUTION.—

24 The term ‘eligible educational institution’ means—

25 ‘‘(A) an institution of higher education,
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1 ‘‘(B) a vocational school,

2 ‘‘(C) a secondary school, or

3 ‘‘(D) an elementary school.

4 ‘‘(3) INSTITUTION OF HIGHER EDUCATION.—

5 The term ‘institution of higher education’ means the

6 institutions described in section 1201(a) or 481(a)

7 of the Higher Education Act of 1965.

8 ‘‘(4) VOCATIONAL SCHOOL.—The term ‘voca9 tional school’ means an area vocational education

10 school as defined in section 521(3) of the Carl D.

11 Perkins Vocational Education Act.

12 ‘‘(5) ELEMENTARY AND SECONDARY

13 SCHOOLS.—The terms ‘elementary school’ and ‘sec14 ondary school’ mean, respectively, any elementary or

15 secondary school (as defined in paragraph (7) of sec16 tion 198(a) of the Elementary and Secondary Edu17 cation Act of 1965) which is privately operated but

18 only if it is—

19 ‘‘(A) accredited or approved under State

20 law (or, in the case of school in a State which

21 has no procedure for the accreditation or ap22 proval of privately operated schools, which

23 meets the requirements of State law relating to

24 compulsory school attendance), and
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1 ‘‘(B) exempt from taxation under section

2 501(a) as an organization described in section

3 501(c)(3).

4 The terms ‘elementary school’ and ‘secondary school’

5 include facilities which offer education for individ6 uals who are physically or mentally handicapped as

7 a substitute for public elementary or secondary edu8 cation.

9 ‘‘(d) SPECIAL RULES.—

10 ‘‘(1) ADJUSTMENT FOR CERTAIN SCHOLAR11 SHIPS AND VETERANS BENEFITS.—The amounts

12 otherwise taken into account under subsection (a) as

13 educational expenses of any individual during any

14 period shall be reduced (before the application of

15 subsection (b)) by any amounts received by such in16 dividual during such period as—

17 ‘‘(A) a qualified scholarship (within the

18 meaning of section 117(b)) which under section

19 117 is not includible in gross income, or

20 ‘‘(B) an educational assistance allowance

21 under chapters 32, 34, or 35 of title 38 of the

22 United States Code.

23 ‘‘(2) ELIGIBLE COURSES.—Amounts paid for

24 educational expenses of any individual shall be taken
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1 into account under subsection (a) only to the extent

2 such expenses—

3 ‘‘(A) are attributable to courses of instruc4 tion offered by an elementary or secondary

5 school, or

6 ‘‘(B) are attributable to courses of instruc7 tion for which credit is allowed toward a bacca8 laureate degree by an institution of higher edu9 cation or toward a certificate of required course

10 work at a vocational school and are not attrib11 utable to any graduate program of such individ12 ual.

13 ‘‘(3) INDIVIDUAL MUST BE AT LEAST HALF14 TIME STUDENT.—No credit shall be allowed under

15 subsection (a) for amounts paid during the taxable

16 year for educational expenses with respect to any in17 dividual unless that individual, during any 4 cal18 endar months during the calendar year in which the

19 taxable year of the taxpayer begins, is at least a

20 half-time student at an eligible education institution.

21 ‘‘(4) SPOUSE.—No credit shall be allowed under

22 subsection (a) for amounts paid during the taxable

23 year for educational expenses for the spouse of the

24 taxpayer unless—
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1 ‘‘(A) the taxpayer is entitled to an exemp2 tion for his spouse under section 151(b) for the

3 taxable year, or

4 ‘‘(B) the taxpayer files a joint return with

5 his spouse for the taxable year.

6 ‘‘(e) DISALLOWANCE OF EXPENSES AS DEDUC7 TION.— No deduction shall be allowed under section 162

8 (relating to trade or business expenses) for any edu9 cational expense which (after the application of subsection

10 (b)) is taken into account in determining the amount of

11 any credit allowed under subsection (a). The preceding

12 sentence shall not apply to the educational expenses of any

13 taxpayer who, under regulations prescribed by the Sec14 retary, elects not to apply the provisions of this section

15 with respect to such expenses for the taxable year.

16 ‘‘(f) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be necessary to carry out the pro18 visions of this section.’’

19 (b) CLERICAL AMENDMENT.—The table of sections

20 for such subpart A is amended by inserting after the item

21 relating to section 25 the following new item:

‘‘Sec. 25A. Expenses of higher education.’’

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years beginning after

24 December 31, 1995.

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