To amend the Internal Revenue Code of 1986 to allow individuals a credit against income tax for tuition and related expenses for public and nonpublic elementary and secondary education.

January 26, 2005

Mr. PAUL (for himself, Mr. BARTLETT of Maryland, Mr. NORWOOD, Mr. SENSENBRENNER, Mr. TANCREDO, Mrs. MUSGRAVE, and Mr. MARIO DIAZ-BALART of Florida) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to allow individuals a credit against income tax for tuition and related expenses for public and nonpublic elementary and secondary education.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Family Education Freedom Act of 2005'.

SEC. 2. CREDIT FOR TUITION AND RELATED EXPENSES FOR PUBLIC AND NONPUBLIC ELEMENTARY AND SECONDARY EDUCATION.

(a) In General- Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25B the following new section:

`SEC. 25C. TUITION AND RELATED EXPENSES FOR PUBLIC AND NONPUBLIC ELEMENTARY AND SECONDARY EDUCATION.

`(a) Allowance of Credit- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the qualified educational expenses paid during such taxable year for the elementary or secondary education of any dependent (as defined in section 152) of the taxpayer at a qualified educational institution.

`(b) Limitation- The credit allowed by this section shall not exceed $3,000 per student for any taxable year.

`(c) Definitions- For purposes of this section--

`(1) QUALIFIED EDUCATIONAL EXPENSES- The term `qualified educational expenses' means cost of attendance in connection with the elementary or secondary education of the student at a qualified educational institution. Under regulations prescribed by the Secretary, rules similar to the rules relating to cost of attendance (within the meaning of section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll) (as in effect on the date of the enactment of this paragraph) shall apply for purposes of the preceding sentence.

`(2) QUALIFIED EDUCATIONAL INSTITUTION- The term `qualified educational institution' means any educational institution (including any private, parochial, religious, or home school) organized for the purpose of providing elementary or secondary education, or both.

`(d) Cost-of-Living Adjustment-

`(1) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2005, the $3,000 amount contained in subsection (b) shall be increased by an amount equal to--

`(A) $3,000, multiplied by

`(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins by substituting `calendar year 2004' for `calendar year 1992' in subparagraph (B) thereof.

`(2) ROUNDING- If any increase determined under paragraph (1) is not a multiple of $10, such increase shall be rounded to the next highest multiple of $10. In the case of a married individual (as determined under section 7703) filing a separate return, the preceding sentence shall be applied by substituting `$5' for `$10' each place it appears.

`(e) Regulations- The Secretary shall prescribe regulations to carry out this section, including regulations providing for claiming the credit under this section on Form 1040EZ.'.

(b) Clerical Amendment- The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25B the following new item:

`Sec. 25C. Tuition and related expenses for public and nonpublic elementary and secondary education.'.

(c) Effective Date- The amendments made by this section shall apply to amounts paid in taxable years beginning after December 31, 2004.

END