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Congress Extends Tuition Deduction and R&D Credit Prior to Adjournment

December 13, 2006

In the final hours of the 109th Congress, the House and Senate passed a broad tax and trade bill that includes extension of the above-the-line tuition deduction and the research and development tax credit.  Both provisions expired at the end of 2005. The Tax Relief and Health Care Act of 2006 (H.R. 6111), also includes health savings account changes, extension of the state and local tax deduction, a number of energy tax extensions, and several trade provisions. President Bush signed the bill into law on December 20, 2006.

The above-the-line tuition deduction enables taxpayers earning $65,000 or less a year ($130,000 for married couples filing jointly) to deduct up to $4,000 annually in tuition and related expenses. For those with adjusted gross income of $80,000 ($160,000 for married couples), the deduction is limited to $2,000 annually.  H.R. 6111 extends the tuition deduction for tax years 2006 and 2007.

Summary of provisions of H.R. 6111