An Examination and Analysis of the Provisions of The American Taxpayer Relief Act of 2012 Impacting Higher Education Costs

• In Event: Taxes 2

Abstract

On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (ATRA) into law, an action which dramatically averted the tax side of the “Fiscal Cliff” at the thirteenth hour. The American Taxpayer Relief Act of 2012 avoids draconian automatic sunset provisions that were scheduled to take effect after 2012 under the Bush-era tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTTRA) and the Job and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA,) both of which were extended by subsequent legislation. Without the American Taxpayer Relief Act, individual tax rates would have increased for all taxpayers, favorable treatment of capital gains and dividends would have disappeared, enhancements to education tax incentives would have disappeared as well as other popular and temporary incentives. This paper will examine specific tax provisions which directly affect higher education costs, including Code §127, Employer-provided Education Assistance, Code §221(b), Student Loan Interest Deduction, Code §25A, Education Tax Credits, and, Code §222, Tuition and Fees Deduction. It is worth noting that for the first time in history, some of these coveted provisions were made permanent. In addition, for these specific tax deductions and credits, the authors performed a benefit use rate analysis to understand how the provisions have been used since 2006.

Authors

• Benjamin R Silliman, St. John's University

• Maria Pirrone, St. John's University