This bill provides a refundable credit of the amount of interest and principal paid on qualifying student loans, up to $5,000. The credit is available to eligible individuals with at least one qualified education loan related to an undergraduate or graduate degree at a postsecondary institution, or to the parent of an eligible individual, less the amount claimed by the eligible individual.
A postsecondary educational institution means a postsecondary institution eligible for state student aid or a postsecondary institution participating in the federal Pell Grant program. A qualified education loan is indebtedness incurred by the taxpayer solely to pay qualified higher education expenses incurred on behalf of the taxpayer or the taxpayer’s spouse, was paid or incurred within a reasonable period of time before or after the indebtedness is incurred, and is attributable to education furnished during a period during which the recipient was an eligible student.
The credit is phased out for married joint filers by $1 for every $6 of modified adjusted gross income in excess of $130,000 and for all other filers by $1 for every $3 of modified adjusted gross income in excess of $65,000.
Effective beginning in tax year 2017.