HR 436 IH

To amend the Internal Revenue Code of 1986 to repeal the dollar limitation on the deduction for interest on education loans, to increase the income threshold for the phase out of such deduction, and to repeal the 60-month limitation on the amount of such interest that is allowable as a deduction.

February 6, 2001

Mr. ENGLISH (for himself and Mr. HULSHOF) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to repeal the dollar limitation on the deduction for interest on education loans, to increase the income threshold for the phase out of such deduction, and to repeal the 60-month limitation on the amount of such interest that is allowable as a deduction.

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

SECTION 1. EXPANSION OF DEDUCTION FOR INTEREST ON EDUCATION LOANS.

(a) REPEAL OF DOLLAR LIMITATION ON, AND INCREASE IN INCOME THRESHOLD FOR PHASE OUT OF, DEDUCTION FOR INTEREST ON EDUCATION LOANS-

(1) IN GENERAL- Subsection (b) of section 221 of the Internal Revenue Code of 1986 (relating to maximum deduction) is amended to read as follows:

`(b) LIMITATION BASED ON ADJUSTED GROSS INCOME-

`(1) IN GENERAL- The amount which would (but for this subsection) be allowable as a deduction under this section shall be reduced (but not below zero) by the amount determined under paragraph (2).

`(2) AMOUNT OF REDUCTION- The amount determined under this paragraph is the amount which bears the same ratio to the amount which would be so taken into account as--

`(A) the excess of--

`(i) the taxpayer's modified adjusted gross income for such taxable year, over

`(ii) $100,000 ($150,000 in the case of a joint return), bears to

`(B) $15,000.

`(3) MODIFIED ADJUSTED GROSS INCOME- The term `modified adjusted gross income' means adjusted gross income determined--

`(A) without regard to this section and sections 911, 931, and 933, and

`(B) after application of sections 86, 135, 137, 219, and 469.'.

(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 2001.

(b) REPEAL OF 60-MONTH LIMITATION ON DEDUCTION FOR INTEREST ON EDUCATION LOANS-

(1) IN GENERAL- Section 221 of the Internal Revenue Code of 1986 (relating to interest on education loans) is amended by striking subsection (d) and by redesignating subsections (e), (f), and (g) as subsections (d), (e), and (f), respectively.

(2) CONFORMING AMENDMENT- Subsection (e) of section 6050S of such Code is amended by striking `section 221(e)(1)' and inserting `section 221(d)(1)'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to loan interest payments due and paid after December 31, 2001, in taxable years ending after such date.

END