H.R. 3393, Student and Family Tax Simplification Act

Cost Estimate
July 7, 2014

As ordered reported by the House Committee on Ways and Means on June 25, 2014

H.R. 3393 would amend certain education-related provisions of the Internal Revenue Code. The bill would permanently extend, in modified form, the American Opportunity Tax Credit (AOTC) for tuition and related post-secondary expenses that is currently scheduled to expire at the end of 2017. Modifications to the credit would include increasing the refundable portion (starting in 2015) and indexing the credit and income phaseout amounts for inflation (starting in 2019). The Hope tax credit, which is scheduled to come back into effect in 2018 when the AOTC expires, would be replaced by the AOTC, and the Lifetime Learning tax credit would be repealed. In addition, for Pell grant recipients, the bill would increase the amount of expenses that potentially qualify for the AOTC, and Pell grant amounts that exceeded certain education expenses would no longer be considered taxable income. The bill would also modify the information-reporting requirements on higher educational institutions.

The staff of the Joint Committee on Taxation (JCT) estimates that enacting H.R. 3393 would increase direct spending over the 2014-2024 period by about $73.7 billion, and reduce revenues over that period by about $22.7 billion. JCT therefore estimates that enacting the legislation would increase federal budget deficits by about $96.5 billion over the 2014-2024 period.

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending and revenues. Because enacting H.R. 3393 would affect revenues and direct spending, pay-as-you-go procedures apply.

JCT has determined that the bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.