To amend the Internal Revenue Code of 1986 to provide a refundable tax credit for certain expenses of applying to graduate school.

SECTION 1. SHORT TITLE; FINDINGS.

    (a) Short Title.--This Act may be cited as the ``Leadership Invests 
in the Future Through Helping Individuals Gain Higher Education and 
Retraining Act of 2012'' or as the ``LIFT HIGHER Act of 2012''.
    (b) Findings.--Congress finds the following:
            (1) The median student loan debt for students who graduated 
        from college between 2006 and 2010 is $20,000.
            (2) Application fees for individual schools range from $40 
        to $140. The cost of taking the Graduate Record Exam once is 
        $150. Law school admission test preparation courses cost 
        upwards of $1,500. These costs make it difficult for many 
        students to apply to graduate school and discourage others from 
        doing so.
            (3) The percentage of Americans with graduate degrees is 
        continuing to rise, with 10.9% of the population having 
        graduate degrees as of 2011.
            (4) Persons with advanced degrees earn on average $3.2 
        million in their lifetime compared to those holding a bachelors 
        degree who earn about $2.27 million.
            (5) It is in the national interest to have highly educated 
        citizenry.
            (6) University education is the best and most effective way 
        to obtain professional training and skills.

SEC. 2. REFUNDABLE TAX CREDIT FOR GRADUATE SCHOOL APPLICATION EXPENSES.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 36B the following new section:

``SEC. 36C. CREDIT FOR GRADUATE SCHOOL APPLICATION EXPENSES.

    ``(a) Allowance of Credit.--In the case of a specified graduate 
school applicant, there shall be allowed as a credit against the tax 
imposed by this subtitle for such taxable year an amount equal to the 
qualified graduate school application expenses paid or incurred by such 
applicant during such taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The amount allowable as a credit 
        under subsection (a) with respect to any individual for any 
        taxable year shall not exceed the excess of $500 over the 
        aggregate amount of the credits allowable under subsection (a) 
        with respect to such individual for all prior taxable years.
            ``(2) Limitation based on modified adjusted gross income.--
                    ``(A) In general.--The amount allowable as a credit 
                under subsection (a) (determined without regard to this 
                paragraph and after the application of paragraph (1)) 
                for the taxable year shall be reduced (but not below 
                zero) by the amount which bears the same ratio to the 
                amount which is so allowable as--
                            ``(i) the excess (if any) of--
                                    ``(I) the taxpayer's modified 
                                adjusted gross income for such taxable 
                                year, over
                                    ``(II) $60,000 ($120,000 in the 
                                case of a joint return), bears to
                            ``(ii) $5,000.
                    ``(B) Modified adjusted gross income.--For purposes 
                of subparagraph (A), the term `modified adjusted gross 
                income' means the adjusted gross income of the taxpayer 
                for the taxable year increased by any amount excluded 
                from gross income under section 911, 931, or 933.
    ``(c) Specified Graduate School Applicant.--For purposes of this 
section, the term `specified graduate school applicant' means any 
individual who applies to an eligible educational institution (as 
defined in section 25A(f)(2)) for acceptance into a program of 
postbaccalaureate study leading to a graduate degree from such 
institution.
    ``(d) Qualified Graduate School Application Expenses.--For purposes 
of this section, the term `qualified graduate school application 
expenses' means amounts paid or incurred--
            ``(1) as an application fee with respect to applying for 
        the program of study referred to in subsection (c),
            ``(2) as a fee for taking any test which is required in 
        connection with applying for such program of study,
            ``(3) for study and preparation materials (whether printed 
        or electronic) for any test referred to in paragraph (2), or
            ``(4) for tutorial and preparation services for any test 
        referred to in paragraph (2) if such services are provided by a 
        person approved or licensed under State law to provide such 
        services.
    ``(e) Credit Not Allowed to Individuals Who Can Be Claimed as 
Dependents.--No credit shall be allowable under subsection (a) with 
respect to any individual with respect to whom a deduction under 
section 151 is allowable to another taxpayer for a taxable year 
beginning in the calendar year in which the taxable year referred to in 
subsection (a) begins.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 6211(b)(4) of such Code is 
        amended by inserting ``36C,'' after ``36B,''.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting ``36C,'' after ``36B,''.
    (c) Clerical Amendment.--The table of sections for subpart C of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 36B the 
following new item:

``Sec. 36C. Credit for graduate school application expenses.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

Summary: Leadership Invests in the Future Through Helping Individuals Gain Higher Education and Retraining Act of 2012 or the LIFT HIGHER Act of 2012 - Amends the Internal Revenue Code to allow applicants to a graduate school program an income-based refundable tax credit for expenses in connection with a graduate school program application, including application fees, fees for taking any required test, and amounts paid for study and preparation materials or for tutorial and preparation services for any test required by a graduate program. Limits the amount of such credit in any taxable year to $500 over the aggregate amount of credits allowable for all prior taxable years.

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