After months of debate, conferencing, and closed-door deals, Republicans in Congress passed a sweeping tax reform bill—H.R. 1, the Tax Cuts and Jobs Act—that was signed into law by President Trump on December 22, 2017.
While the bill has implications that will undoubtedly affect all Americans, there are several components that may directly affect schools, educators, and students:
- State and Local Tax (SALT) Deduction – According to Education Week, the cap on SALT deductions in the GOP tax bill could be where the bill hits school funding the hardest. Because public K–12 education relies heavily on funding from state and local revenue, this cap could make it harder for states to raise funds for education. Click here to access the article by Education Week to learn more.
- Educator Tax Deduction – The original House version of the tax bill eliminated a provision that allows K–12 teachers and principals to deduct up to $250 that they spend on their students or classes. Following strong opposition from educators, the final version of the bill ended up keeping the $250 deduction in place.
- 529 Savings Plans – 529 savings plans are tax-advantaged plans that were originally created for use as a way to save for college. The new tax bill now allows for 529 plans to cover expenses at public, private, and religious schools. Depending on how many choose to take advantage of this new option, this could have drastic impacts on the number of students attending public schools, which could greatly affect those schools’ funding levels.
- Qualified Zone Academy Bonds – Qualified Zone Academy Bonds are a tax-advantaged tool used to help schools raise funds to renovate or repair buildings, invest in equipment or update technology, develop challenging curricula, or train quality teachers. These bonds are often particularly important for charter schools, as the construction of a new charter school is sometimes covered by these bonds. The final version of the tax bill eliminates these bonds completely.
Overall, this bill is set to benefit higher-income individuals and its components indicate that the Trump administration has no concerns with cutting funding for education and it will continue to do so through other avenues as well, including the FY 2018 budget (which has not yet been completed).
It is extremely important that all educators stand together and voice their support of public education, and the importance that federal dollars play in ensuring that all students are college and career ready.