Student Loan Repayment Act of 2016

To amend the Internal Revenue Code of 1986 to include student loan repayers as members of targeted groups for purposes of the work opportunity credit and to provide for a credit against tax for student loan program startup costs. 1. Short title This Act may be cited as the Student Loan Repayment Act of 2016 2. Inclusion of student loan repayers for purposes of work opportunity credit (a) In general Section 51(d)(1) or , or (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 (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. 3. Student loan program startup costs credit (a) In general Subpart D of part IV of subchapter A of chapter 1 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 (d) Other definitions For purposes of this section— (1) Qualified startup costs (A) In general The term qualified startup costs (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 (3) Qualified matching contribution The term qualified matching contribution (A) the amount of such employee contribution, and (B) $2,000. (4) First credit year The term first credit year (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 , plus (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 , and (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.

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 "qualified student loan repayer" 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.