Congress votes to keep higher-education tax incentives
The bill (H.R. 8) passed by Congress this morning to avert the "fiscal cliff" preserves essentially all of the higher-education tax incentives enacted in recent years.
By making the 2001 tax changes permanent--most were scheduled to expire on December 31, 2012--the Coverdell education savings account retains its usefulness for K-12 expenses and allows up to $2,000 in annual contributions.
The provisions of the 2001 law affecting 529 plans, including tax-free treatment for qualified withdrawals, had already been made permanent by a 2006 law and were not at risk of expiring.
H.R. 8 increases the income and capital-gains tax rates on single taxpayers with more than $400,000 in taxable income and for couples over $450,000. These changes make 529 plans even more appealing for high-income families exposed to the higher tax rates.
The bill extends the $2,500 American Opportunity Tax Credit for five years (through 2017) and extends the above-the-line deduction for tuition and fees through 2013.
The extension of the tuition and fees deduction was made retroactively, as that incentive had already expired at the end of 2011.
Return to 529 News centerBy making the 2001 tax changes permanent--most were scheduled to expire on December 31, 2012--the Coverdell education savings account retains its usefulness for K-12 expenses and allows up to $2,000 in annual contributions.
The provisions of the 2001 law affecting 529 plans, including tax-free treatment for qualified withdrawals, had already been made permanent by a 2006 law and were not at risk of expiring.
H.R. 8 increases the income and capital-gains tax rates on single taxpayers with more than $400,000 in taxable income and for couples over $450,000. These changes make 529 plans even more appealing for high-income families exposed to the higher tax rates.
The bill extends the $2,500 American Opportunity Tax Credit for five years (through 2017) and extends the above-the-line deduction for tuition and fees through 2013.
The extension of the tuition and fees deduction was made retroactively, as that incentive had already expired at the end of 2011.