Syracuse, NY -- Middle class parents could reduce their federal tax bill by $4,000 annually for each child they have in college with a tuition tax credit that U.S. Sen. Charles Schumer is pushing to be included in President-elect Barack Obama's $775 billion economic stimulus bill.
Speaking at Syracuse University's Schine Student Center this morning before a crowd of more than 100 students, Schumer said he has talked to Obama representatives about the proposal and is confident the new credit will be included in the stimulus package.
"We're very close to getting it," he said. "It's not a done deal, yet."
The proposal would allow parents of a college student who file jointly and earn up to $140,000 to claim a $4,000 credit per child annually for four years on their tax return, Schumer said.
The credit would replace the current tuition tax deduction and two credits, the Hope credit and Lifetime Learning credit, and increase the tax breaks for middle class families, Schumer said.
Under the current tuition tax deduction, parents of college students can lower their taxable income by up to $4,000. The Hope credit allows them to reduce their tax bill by up to $1,800 per year for a child's first two years of college. The Lifetime Learning credit allows parents of college students to lower their tax bill by up to $2,000 annually.
"A family making $60,000, they save about $3,000 with the (proposed) tuition credit," Schumer said. "Under the old plan, they only saved $600 (with the tuition deduction). So it's a huge increase in assistance for the middle class."
The proposal, which would become effective for the 2009 tax year, could double or quadruple a family's savings on their tax bill, Schumer's staff said.
Schumer and his staff could not provide an estimate on how much the proposed change to the tax code would cost the country.
The new credit will also allow students or their parents to include the costs of textbooks, which cannot be included in the current deduction or credits.
"It's a crusade of mine, making college more affordable for the middle class," Schumer said. "College education is a necessity that is being priced like a luxury. It's breaking the bank for students and families throughout Central New York, throughout New York State, and throughout the country."
"We have lots of programs that are very good that help poorer students pay for college. But if your family income is $50,000, $75,000, or $100,000, and you have to pay $20,000 or $30,000 in tuition, you don't feel very middle class," he said.