I 
109TH CONGRESS 
1ST SESSION 
H. R. 404 
To amend the Internal Revenue Code of 1986 to allow a credit against 
income tax for amounts contributed to charitable organizations which 
provide elementary or secondary school scholarships and for contributions 
of, and for, instructional materials and materials for extracurricular 
activities. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 26, 2005 
Mr. PAUL (for himself, Mr. GARRETT of New Jersey, Mr. SENSENBRENNER, 
Mr. RYUN of Kansas, Mr. BARTLETT of Maryland, Mrs. MUSGRAVE, Mr. 
TANCREDO, and Mr. MARIO DIAZ-BALART of Florida) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow a 
credit against income tax for amounts contributed to 
charitable organizations which provide elementary or sec-
ondary school scholarships and for contributions of, and 
for, instructional materials and materials for extra-
curricular activities. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Education Improve-
ment Tax Cut Act’’.
SEC. 2. CREDIT FOR CONTRIBUTIONS TO CHARITABLE OR-
GANIZATIONS WHICH PROVIDE ELEMENTARY 
OR SECONDARY SCHOOL SCHOLARSHIPS. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25B the following new 
section: 
‘‘SEC. 25C. CONTRIBUTIONS TO ORGANIZATIONS PRO-
VIDING 
ELEMENTARY 
OR 
SECONDARY 
SCHOOL SCHOLARSHIPS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to the qualified scholarship contributions of the tax-
payer for the taxable year. 
‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub-
section (a) for any taxable year shall not exceed $3,000 
($1,500 in the case of a married individual (as determined 
under section 7703) filing a separate return). 
‘‘(c) QUALIFIED SCHOLARSHIP CONTRIBUTION.— 
For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified schol-
arship contribution’ means, with respect to any tax-
able year, the amount which would (but for sub-
section (d)) be allowable as a deduction under sec-
tion 170 for cash contributions to a school tuition 
organization. 
‘‘(2) SCHOOL TUITION ORGANIZATION.— 
‘‘(A) IN GENERAL.—The term ‘school tui-
tion organization’ means any organization de-
scribed in section 170(c)(2) if the annual dis-
bursements of the organization for elementary 
and secondary school scholarships are normally 
not less than 90 percent of the sum of such or-
ganization’s annual gross income and contribu-
tions and gifts. 
‘‘(B) 
ELEMENTARY
AND
SECONDARY 
SCHOOL SCHOLARSHIP.—The term ‘elementary 
and secondary school scholarship’ means any 
scholarship excludable from gross income under 
section 117 for expenses related to education at 
or below the 12th grade. 
‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 
shall be allowed under this chapter for any contribution 
for which a credit is allowed under this section. 
‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.— 
‘‘(1) IN GENERAL.—A taxpayer may elect to 
have this section not apply for any taxable year. 
‘‘(2) TIME FOR MAKING ELECTION.—An elec-
tion under paragraph (1) for any taxable year may
be made (or revoked) at any time before the expira-
tion of the 3-year period beginning on the last date 
prescribed by law for filing the return for such tax-
able year (determined without regard to extensions). 
‘‘(f) COST-OF-LIVING ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 2005, 
each dollar amount contained in subsection (b) shall be 
increased by an amount equal to— 
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, by substituting ‘calendar 
year 2004’ for ‘calendar year 1992’ in subparagraph 
(B) thereof. 
If any increase determined under the preceding sentence 
is not a multiple of $10, such increase shall be increased 
to the next highest multiple of $10. In the case of a mar-
ried individual (as determined under section 7703) filing 
a separate return, the preceding sentence shall be applied 
by substituting ‘$5’ for ‘$10’ each place it appears. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
regulations to carry out this section, including regulations 
providing for claiming the credit under this section on 
Form 1040EZ.’’.
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 25B the following new item: 
‘‘25C. Contributions to organizations providing elementary or secondary school 
scholarships.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
SEC. 3. CREDIT FOR CONTRIBUTIONS OF AND FOR IN-
STRUCTIONAL MATERIALS AND MATERIALS 
FOR EXTRACURRICULAR ACTIVITIES. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25C the following new 
section: 
‘‘SEC. 25D. CONTRIBUTIONS OF AND FOR INSTRUCTIONAL 
MATERIALS AND MATERIALS FOR EXTRA-
CURRICULAR ACTIVITIES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to the qualified school materials contributions of the 
taxpayer for the taxable year.
‘‘(b) MAXIMUM CREDIT.—The credit allowed by sub-
section (a) for any taxable year shall not exceed $3,000 
($1,500 in the case of a married individual (as determined 
under section 7703) filing a separate return). 
‘‘(c) QUALIFIED SCHOOL MATERIALS CONTRIBU-
TION.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified school 
materials contribution’ means, with respect to any 
taxable year, the amount which would (but for sub-
section (d)) be allowable as a deduction under sec-
tion 170 for— 
‘‘(A) any cash contribution to any elemen-
tary or secondary school if such contribution is 
designated to be used solely to acquire qualified 
school materials, 
‘‘(B) any contribution of qualified school 
materials to any elementary or secondary 
school, and 
‘‘(C) any cash contribution to a school ma-
terials organization. 
‘‘(2) ELEMENTARY OR SECONDARY SCHOOL.— 
The term ‘elementary or secondary school’ means 
any 
organization 
described 
in 
section 
170(b)(1)(A)(ii) which provides education solely at 
or below the 12th grade.
‘‘(3) SCHOOL MATERIALS ORGANIZATION.— 
‘‘(A) IN GENERAL.—The term ‘school ma-
terials organization’ means any organization de-
scribed in section 170(c)(2) if— 
‘‘(i) the primary function of the orga-
nization is to raise funds for elementary or 
secondary schools, and 
‘‘(ii) the annual disbursements of the 
organization for qualified school materials 
which are provided to elementary and sec-
ondary schools are normally not less than 
90 percent of the sum of such organiza-
tion’s annual gross income and contribu-
tions and gifts. 
‘‘(B) QUALIFIED
SCHOOL
MATERIALS.— 
The term ‘qualified school materials’ means— 
‘‘(i) instructional materials and equip-
ment, including library books and mate-
rials, computers, and computer software, 
and 
‘‘(ii) materials and equipment for 
school-sponsored extracurricular activities. 
‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 
shall be allowed under this chapter for any contribution 
for which a credit is allowed under this section.
‘‘(e) ELECTION TO HAVE CREDIT NOT APPLY.— 
‘‘(1) IN GENERAL.—A taxpayer may elect to 
have this section not apply for any taxable year. 
‘‘(2) TIME FOR MAKING ELECTION.—An elec-
tion under paragraph (1) for any taxable year may 
be made (or revoked) at any time before the expira-
tion of the 3-year period beginning on the last date 
prescribed by law for filing the return for such tax-
able year (determined without regard to extensions). 
‘‘(f) COST-OF-LIVING ADJUSTMENT.—In the case of 
any taxable year beginning in a calendar year after 2005, 
each dollar amount contained in subsection (b) shall be 
increased by an amount equal to— 
‘‘(1) such dollar amount, multiplied by 
‘‘(2) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, by substituting ‘calendar 
year 2004’ for ‘calendar year 1992’ in subparagraph 
(B) thereof. 
If any increase determined under the preceding sentence 
is not a multiple of $10, such increase shall be increased 
to the next highest multiple of $10. In the case of a mar-
ried individual (as determined under section 7703) filing 
a separate return, the preceding sentence shall be applied 
by substituting ‘$5’ for ‘$10’ each place it appears.
‘‘(g) REGULATIONS.—The Secretary shall prescribe 
regulations to carry out this section, including regulations 
providing for claiming the credit under this section on 
Form 1040EZ.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 25C the following new item: 
‘‘Sec. 25D. Contributions of and for instructional materials and materials for 
extracurricular activities.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
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