To amend the Internal Revenue Code of 1986 to allow a deduction for the payment of postsecondary education expenses.

SECTION 1. DEDUCTION FOR POSTSECONDARY EDUCATION EXPENSES.

    (a) Deduction Allowed.--Part VII of subchapter B of chapter 1 of 
the Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 220 as 
section 221 and by inserting after section 219 the following new 
section:

``SEC. 220. POSTSECONDARY EDUCATION EXPENSES.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction an amount equal to the qualified 
postsecondary education expenses paid by the taxpayer during the 
taxable year.
    ``(b) Dollar Limitations.--
            ``(1) Per student.--The aggregate payments during the 
        taxable year for the qualified postsecondary education expenses 
        of each individual which may be taken into account under 
        subsection (a) shall not exceed $10,000.
            ``(2) Per taxpayer.--The amount allowed as a deduction 
        under subsection (a) for the taxable year shall not exceed 
        $20,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified postsecondary education expenses.--The term 
        `qualified postsecondary education expenses' means qualified 
        tuition and related expenses of--
                    ``(A) the taxpayer, or
                    ``(B) an individual who is the spouse, or a 
                dependent, of the taxpayer for the taxable year in 
                which such expenses are incurred,
        for attendance at an eligible educational institution.
            ``(2) Qualified tuition and related expenses.--The term 
        `qualified tuition and related expenses' means--
                    ``(A) tuition and fees required for enrollment or 
                attendance at an eligible educational institution,
                    ``(B) fees, books, supplies, and equipment required 
                for courses of instruction at such an institution, and
                    ``(C) reasonable living expenses while away from 
                home.
        Such term shall not include expenses which are treated as not 
        described in section 135(c)(2)(A) by reason of section 
        135(c)(2)(B).
            ``(3) Eligible educational institution.--The term `eligible 
        educational institution' has the meaning given to such term by 
        section 135(c)(3).
    ``(d) Coordination With Other Provisions.--
            ``(1) No double benefit.--
                    ``(A) In general.--No deduction shall be allowed 
                under subsection (a) for qualified postsecondary 
                education expenses with respect to which a deduction is 
                allowed under any other provision of this chapter.
                    ``(B) Savings bond exclusion.--A deduction shall be 
                allowed under subsection (a) for qualified 
                postsecondary education expenses only to the extent the 
                amount of such expenses exceeds the amount excludable 
                under section 135 for the taxable year.
    ``(e) Special Rules.--
            ``(1) Adjustment for certain scholarships and veterans 
        benefits.--The amounts otherwise taken into account under 
        subsection (a) as qualified postsecondary education 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 30, 31, 32, 34, or 35 of title 38 of the 
                United States Code.
            ``(2) Eligible courses.--Amounts paid for qualified 
        postsecondary education expenses of any individual shall be 
        taken into account under subsection (a) only to the extent such 
        expenses are attributable to courses of instruction for which 
        credit is allowed toward a degree by an institution of higher 
        education or toward a certificate of required course work at a 
        vocational school.
            ``(3) Individual must be at least a half-time student.--No 
        deduction shall be allowed under subsection (a) for amounts 
        paid during the taxable year for qualified postsecondary 
        education 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) Taxpayer who is dependent of another taxpayer.--No 
        deduction shall be allowed to a taxpayer under subsection (a) 
        for amount paid for the education of such taxpayer if such 
        taxpayer is a dependent of another person for a taxable year 
        beginning in the calendar year in which the taxable year of the 
        taxpayer begins.
            ``(5) Spouse.--No deduction shall be allowed under 
        subsection (a) for amounts paid during the taxable year for 
        qualified postsecondary education 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.''
    (b) Deduction Allowed in Computing Adjusted Gross Income.--Section 
62(a) of such Code is amended by inserting after paragraph (15) the 
following new paragraph:
            ``(16) Postsecondary education expenses.--The deduction 
        allowed by section 220.''
    (c) Conforming Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 220 and inserting:

                              ``Sec. 220. Postsecondary education 
                                        expenses.
                              ``Sec. 221. Cross reference.''
    (d) Effective Dates.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1994.

Summary: Amends the Internal Revenue Code to allow an income tax deduction for qualified postsecondary education expenses of the taxpayer or the taxpayer's spouse or dependent.