U.S. House Improves Child Tax Credit and Simplifies Higher Education Deductions

Press Release

The U.S. House of Representatives has passed legislation to strengthen the child tax credit and simplify education tax benefits for students and families, Congressman Kevin Cramer said today. Cramer supported the legislation and said it is important Congress act to simplify the tax code.

"While the Senate has not taken up the vast majority of bills passed by the House, they should at least recognize how burdensome and confusing our tax code is. As jobs in other states remain in short supply and many families struggle to make ends meet, we can do better for them by simplifying tax deductions and setting policy more responsive to an increasing cost of living," said Cramer.

The Child Tax Credit Improvement Act indexes the amount of child credit to inflation to address the gradual erosion of its value due to the rising cost of living while also putting married couples on equal footing with single filers by increasing their combined income in line with single filers. The bill also addresses approximately $13 billion in improper refundable tax credit payments by ensuring improper payments aren't issued in the first place.

The Student and Family Tax Simplification Act consolidates four tax benefits for higher education into a single, improved system. It would provide a 100% tax credit for the first $2,000 of certain higher education expenses including tuition and course materials, and a 25% tax credit for the next $2,000 of the same expenses meaning a maximum credit of $2,500. The legislation also includes simple fraud prevention measures to reduce credit overpayments.

The two bills are the third and fourth major efforts by the House this year to provide greater tax certainty. Earlier this month the House passed legislation to make the 50-percent bonus depreciation tax deduction permanent, and in June the House passed America's Small Business Tax Relief Act of 2014, cosponsored by Cramer, which addresses a lapse in the tax code which dropped the Section 179 expensing limitation for tax deductions from $500,000 to $25,000. The legislation would restore the $500,000 cap and make it permanent.

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