A tax bill called the Tax Cuts and Jobs Act seeks to reform the nation’s tax code by reducing income tax rates for individuals and corporations, and eliminating many existing tax benefits, including those available to the higher education and health care communities.
Proposed changes to the tax code would affect the U-M community in the areas of student and family benefits, human resources and employee benefits, charitable giving and endowment, and higher education finance.
The current tax code contains a number of provisions that together create a framework that functions to advance three important goals: encourage saving for higher education, help students and families pay for college, and assist with the repayment of student loans. This framework serves the needs of low- and middle-income students and families as they invest in themselves and in higher education.
In addition, students and families benefit from the nonprofit, tax-exempt status of public and private colleges and universities through charitable giving, endowments and tax-exempt bond financing benefits, all of which help institutions to provide financial aid and advance their teaching, research and public service missions.
The legislation was introduced Nov. 2 in the House of Representatives, followed by a Senate version of the legislation introduced Nov. 9.
Both the House and Senate bills reduce the income tax rate for corporations (from 35 percent to 20 percent) and modify the tax rates for individuals. At the same time, the bills would increase the allowed standard deduction to $12,000 for individuals (up from $6,350) and $24,000 for married couples (up from $12,700).
All of this remains subject to change as the House and the Senate proceed through the legislative process in the coming weeks. Congressional leadership has indicated it hopes to have legislation approved and signed into law before year’s end. The changes could take effect as early as Jan. 1, 2018.