2018 Tax Cuts and Jobs Act: Modifications to Educational Tax Benefits

Tax legislation has changed certain education tax benefits. The 2017 Tax Cuts and Jobs Act (TCJA) offers tax savings as a result of changes to qualified tuition programs and discharge of student loan debt.

Qualified Tuition Programs (529 Plans)

Beginning in 2018, you can save more for a child’s education as a result of changes to qualified tuition programs. You can use a 529 plan to pay up to $10,000 per year, per child, for K-12 tuition. The TCJA allows for the distribution of up to $10,000 in tuition expenses incurred over the tax year for designated beneficiaries who are enrolled at public, private, or religious elementary or secondary schools.

Tuition and Fees Deduction

The Bipartisan Budget Act of 2018 extended through 2017 the above-the-line deduction provided for tuition and related expenses.

Discharge of Student Loan Debt

The TCJA offers tax savings for student loan borrowers whose student loans are forgiven due to a disability. This change applies to student loans discharged in 2018 through 2025. Under prior law, the discharged debt was generally treated as taxable income. The TCJA expanded the income exclusion applicable to the forgiveness of student loan debt to include discharges due to the student’s death or total and permanent disability. This includes Military Veterans with 100% Total and permanent disability.

Contact Us

Please call our office to take advantage of the tax law changes concerning qualified tuition plans and discharges of student loan debt. We are here to assist you.