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Tax breaks on higher ed expenses extended

In the wee hours of Saturday morning, the U.S. Senate joined the House of Representatives in passing legislation that will extend a slew of popular tax breaks, including two with coveted by colleges. The measure, passed by a 79 to 9 margin in the Senate, is on its way to President Bush, who is expected to sign it.

One provision would extend through 2007 a tax deduction for “qualified higher education expenses,? which is available even to taxpayers who do not itemize deductions on their federal returns. The provision, which expired at the end of 2005, applies retroactively to the current 2006 calendar year.

Under the provision, individuals who earn less than $65,000, and couples who earn less than $130,000, can deduct up to $4,000 in tuition and some other college costs for themselves or their children. Individual taxpayers who earn between $65,000 and $80,000, and couples who earn between $130,000 and $160,000, can deduct up to $2,000 in such expenses.

“America is in a race with the rest of the world to grow the strongest, most educated workforce available to attract and keep good-paying jobs here at home,? said Sen. Max Baucus, the Montana Democrat who will head the Senate Finance Committee, which makes tax policy, in the next Congress. “So the tuition deduction is about more than taxes. It’s really about making higher education, whether college or vocational school, affordable and accessible for more of our citizens.?

The rest of the story, from Inside Higher Ed.