Find Out How the Senate Tax Bill Could Help Homeschoolers
The Tax Bill, Tax Cuts and Jobs Act (H.R. 1), is such a hot potato topic!! Y’all know, most of the time, we try to steer clear of such hot topics, except when it directly impacts homeschooling. Well, the new Republican tax bill has an amendment that does directly impact us, so let’s talk about this ONE aspect of the Senate bill.Is the Senate Tax Bill Good for Homeschoolers?
What Does the Amendment to H.R.1 Do?
U.S. Senator Ted Cruz (R-Texas) filed this amendment. Sen. Cruz filed an amendment to the bill that seeks to expand school choice by expanding popular 529 College Savings Plans to include K-12 elementary and secondary school tuition for public, private, and religious schools, and also to include K-12 educational expenses for homeschool students. Adding homeschoolers and expanding 529’s would help ensure that each child receives an education that meets their individual needs, instead of being forced into a one-size-fits-all approach to education. Currently, more than 75% of 529 savings plans are from families making $150,000 or less, and this expansion of the 529 program to help K-12 expenses will further help hardworking Americans and their families save and prepare for their children’s future educational expenses. Vice President Mike Pence broke the tie by casting his vote for this amendment!
What is a 529 College Savings Plan?
The federal government provides tax advantages for families trying to save the money for college tuition and other higher education expenses. This incentive, known as a Section 529 savings plan, allows money to grow tax-free, without incurring federal tax penalties. With the Cruz Amendment, elementary and high school (K-12) expenses of up to $10,000 per year would be qualified expenses for Section 529 plans. Additionally, the Cruz Amendment would include the benefit to homeschool students, which was overlooked in the House bill (House-passed version of H.R. 1).
The Heritage Foundation discussed how this relatively small change to federal tax law could have major implications for school choice.
“Since most states have either tax credits or deductions to encourage saving in a 529 college plan, revising Section 529 to include K–12 expenses would likely encourage states to allow parents to deduct their contributions to 529 plans from their state income tax obligations, in order to encourage saving for K–12 education costs.”
Curious To See How Your Senator Voted?
One of the first things I wanted to know was how did the TN senators vote? You can find the details for the Roll Call Vote below. Click here to go to the Senate website for more information.
Want more information about H.R.1.?
You can read more about The Tax Cuts and Jobs Act Bill on Congress’ website here. The summary from the Congressional website states:
Tax Cuts and Jobs Act was Introduced in House (11/02/2017)
This bill amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses.
With respect to individuals, the bill:
- replaces the seven existing tax brackets (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%) with four brackets (12%, 25%, 35%, and 39.6%),
- increases the standard deduction,
- repeals the deduction for personal exemptions,
- establishes a 25% maximum rate on the business income of individuals,
- increases the child tax credit and establishes a new family tax credit,
- repeals the overall limitation on certain itemized deductions,
- limits the mortgage interest deduction for debt incurred after November 2, 2017, to mortgages of up to $500,000 (currently $1 million),
- repeals the deduction for state and local income or sales taxes not paid or accrued in a trade or business,
- repeals the deduction for medical expenses,
- consolidates and repeals several education-related deductions and credits,
- repeals the alternative minimum tax, and
- repeals the estate and generation-skipping transfer taxes in six years.
For businesses, the bill:
- reduces the corporate tax rate from a maximum of 35% to a flat 20% rate (25% for personal services corporations),
- allows increased expensing of the costs of certain property,
- limits the deductibility of net interest expenses to 30% of the business’s adjusted taxable income,
- repeals the work opportunity tax credit,
- terminates the exclusion for interest on private activity bonds,
- modifies or repeals various energy-related deductions and credits,
- modifies the taxation of foreign income, and
- imposes an excise tax on certain payments from domestic corporations to related foreign corporations.
The bill also repeals or modifies several additional credits and deductions for individuals and businesses.
Current Status of This Bill
Passed Senate with Changes, so it is being sent back to the House on December 2, 2017.
Get your Children InvolvedWe really believe one of the best ways for our children to learn is to be involved in real-life situations that matter to you and your family.
So why not start tracking this Bill as it works its way through the legislature and show your children how Bills become laws (or fail)? You can schedule to receive alerts when this Bill has any activity on the HR1 Page on the Congressional Website. Click here and look right under the title.
How to Turn This Into a Lesson
Do you remember School House Rocks? I STILL remember this video! It is a great place to start, even for older students.
Visit Congress.gov to see a video that shares an overview of the process.
Visit Congress for Kids’ site to help children understand about how laws are made!
Here is a new book on Amazon that you might want to review.
And if you like to make learning fun and your older children are interested, we actually have this game and love it. It is called Constitution Quest.
These are lesson plans for Middle and High School Students. Click here.
And finally Brain Pop has some fun interactive games to help teach this subject!!
I think this would give some parents the incentive to look at their educational choices instead of just plunking their kids in the the PS system (not slamming PS, just saying a lot of parents autopilot their kids into PS). I like the idea of having an option where educational expenses can come out of pre-tax income (as I would have to try really, REALLY hard to spend the max cap). But… my innate distrust of government kicks in. I don’t know a lot about 529 plans, but I worry about strings that would be attached. However, I can get on board with it because no one would be forcing me to open up a 529 for my kid. I’m definitely more on board with this than I am the school voucher program being expanded to homeschoolers that was floating around (is it still?). It has the potential to provide more options for parents.
Thank you Trish. I have not looked at everything with this, but I do think this will be very helpful. I will looking at the 529. Thank you for posting this.
Thank you for putting this into simple to read terms.
Yay… thanks for saying that Pamela!! That was my goal!