1.This Act may be cited as
the Educational Opportunity and
Affordability Act of 2006
.
2.Extension and
expansion of above-the-line deduction for certain expenses of elementary and
secondary school teachers
(a)
(1)Subparagraph (D) of section 62(a)(2) of the Internal
Revenue Code of 1986 (relating to certain expenses of elementary and secondary
school teachers) is amended to read as follows:
(D)Certain
expenses of elementary and secondary school teachers
(i)The deductions allowed by section 162 which consist of
expenses, not in excess of $450, paid or incurred by an eligible
educator—
(I)in connection
with books, supplies (other than nonathletic supplies for courses of
instruction in health or physical education), computer equipment (including
related software services) and other equipment, and supplementary materials
used by the eligible educator, and
(II)for the
professional development of the eligible educator.
(ii)In the case of any taxable year beginning after 2006,
the $450 dollar amount under clause (i) shall be increased by an amount equal
to—
(I)such dollar
amount, multiplied by
(II)the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting
calendar year 2005
for calendar year 1992
in
subparagraph (B) thereof.
If any amount
as adjusted under the preceding sentence is not a multiple of $10, such amount
shall be rounded to the next lowest multiple of
$10..
(b)
(1)Modification to
hours requirementSubparagraph (A) of section 62(d)(1) of the
Internal Revenue Code of 1986 (relating to eligible educator) is amended by
striking 900 hours
and inserting 450
hours
.
(2)Inclusion of
athletic coaches, trainers, and assistantsSubparagraph (A) of
section 62(d)(1) of such Code is amended by striking or aide
and
inserting aide, or athletic coach, trainer, or assistant
.
(c)The amendments made by this section shall apply to taxable
years beginning after December 31, 2005.
3.Expansion of
educational expenses allowed as part of Hope Scholarship Credit
(a)Credit allowed
for first 3 years of postsecondary educationSubparagraph (C) of
section 25A(b)(2) of the Internal Revenue Code of 1986 (relating to credit
allowed only for first 2 years of postsecondary education) is amended by
striking 2
in both the heading and the text and inserting
3
.
(b)Qualified
tuition and related expenses expanded to include books, supplies, and
equipmentParagraph (1) of
section
25A(f) of the Internal Revenue Code of 1986 (defining qualified
tuition and related expenses) is amended by adding at the end the following new
subparagraph:
(D)Additional
expenses allowed for Hope Scholarship CreditFor purposes of the Hope Scholarship
Credit, such term shall include fees, books, supplies, and equipment required
for courses of instruction at the eligible educational
institution.
.
(c)Hope Scholarship
Credit not reduced by Federal Pell Grants and supplemental educational
opportunity grantsSubsection
(g) of section 25A of such Code (relating to special rules) is amended by
adding at the end the following new paragraph:
(8)For purposes of the
Hope Scholarship Credit, paragraph (2) shall not apply to amounts paid for an
individual as a Federal Pell Grant or a Federal supplemental educational
opportunity grant under subparts 1 and 3, respectively, of part A of title IV
of the Higher Education Act of 1965
(20 U.S.C. 1070a and 1070b et seq.,
respectively).
.
(d)Expanded hope
expenses not subject to information reporting requirementsSubsection (e) of section 6050S of such
Code (relating to definitions) is amended by striking subsection
(g)(2)
and inserting subsections (f)(1)(D) and
(g)(2)
.
(e)The amendments made by
this section shall apply to expenses paid after December 31, 2006 (in tax years
ending after such date), for education furnished in academic periods beginning
after such date.
4.Increased
employer provided educational assistance
(a)Paragraph (2) of section 127(a) of the Internal Revenue
Code of 1986 (relating to exclusion from gross income) is amended to read as
follows:
(2)
(A)If, but for this paragraph, this section would exclude
from gross income more than $8,000 of educational assistance furnished to an
individual during a calendar year, this section shall apply only to the first
$8,000 of such assistance so furnished.
(B)
(i)In the case of a calendar year beginning after 2007, the
$8,000 amount in subparagraph (A) shall be increased by an amount equal
to—
(I)such dollar
amount, multiplied by
(II)the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year, determined by substituting calendar year 2006
for
calendar year 1992
in subparagraph (B) thereof.
(ii)If
any amount as adjusted under clause (i) is not a multiple of $100, such amount
shall be rounded to the next lowest multiple of
$100.
.
(b)Section 901 of the Economic Growth and Tax Relief
Reconciliation Act of 2001 shall not apply to section 411 of such Act.
(c)The amendment made by this section shall apply to taxable
years beginning after December 31, 2006.
5.Increased
deduction for student loan interest
(a)Increase in
deduction amount; removal of income capsSubsection (b) section
221 of the Internal Revenue Code of 1986 (relating to maximum deduction) is
amended to read as follows:
(b)The deduction allowed by subsection (a) for the taxable
year shall not exceed
$3,500.
.
(b)Application of
EGTRRA sunsetThe amendment made by subsection (a) shall be
subject to section 901 of the Economic Growth and Tax Relief Reconciliation Act
of 2001 to the same extent and in the same manner as section 412(b) of such
Act.
(c)The amendment made by this section shall apply to taxable
years beginning after December 31, 2006.
6.Extension and
Expansion of QZABs
(a)Section
1397E(e)(1) of the Internal Revenue Code of 1986 (relating to national
limitation) is amended by striking and 2005
and inserting
2005, 2006, 2007, 2008, 2009, and 2010
.
(b)Expansion of
qualified zone academy bonds for public schools in counties with National
Forest System lands and rural counties
(1)Section 1397E(f) of the Internal Revenue Code of 1986
(relating to other definitions) is amended by adding at the end the following
new paragraph:
(4)Qualified zone
academy bondThe term qualified zone academy bond
means any qualified zone academy bond described in subsection (d) and any
qualified zone academy bond described in subsection
(j).
.
(2)Qualified zone
academy bonds for public schools in counties with National Forest System lands
and rural countiesSection 1397E of the Internal Revenue Code of
1986 (relating to credit for holders of qualified zone academy bonds) is
amended by adding at the end the following new subsection:
(j)Qualified zone
academy bond described in subsection
(j)For purposes of this
section—
(1)The term qualified zone academy bond described in
subsection (j) means any bond issued as part of an issue if—
(A)95 percent or
more of the proceeds of such issue are to be used for a qualified purpose with
respect to a qualified zone academy,
(B)the bond is
issued by a State on behalf of an eligible county within the jurisdiction of
which such school is located or by such an eligible county,
(C)the
issuer—
(i)designates such
bond for purposes of this section, and
(ii)certifies that
it has the written approval of the eligible county for such bond
issuance,
(D)the term of each
bond which is part of such issue does not exceed the maximum term permitted
under subsection (d)(3), and
(E)the issue meets the requirements of
paragraphs (6), (7), (8), and (9).
(2)For purposes of this subsection, the term qualified
zone academy means any public school which is located in an eligible
county and provides education or training below the postsecondary level.
(3)For purposes of this subsection, the term eligible
county means any county—
(A)which received
payments under the Secure Rural Schools Act for fiscal year 2006, or
(B)within which
there is a qualified zone academy with a locale code of 7 or 8, or which is
otherwise designated as a rural school, as determined by the Secretary of
Education.
(4)For purposes of this subsection, the term
qualified purpose
means, with respect to any qualified zone
academy, any capital expenditure, employees' salaries, or any other purpose
described in subsection (d)(5).
(5)Limitation on
amount of bonds designated
(A)There is a national limitation for qualified zone
academy bonds described in subsection (j) for each calendar year. Such
limitation is $400,000,000 for 2006, 2007, 2008, 2009, and 2010, and, except as
provided in subparagraph (D), zero thereafter.
(B)The national limitation for qualified zone academy
bonds described in subsection (j) for a calendar year shall be allocated by the
Secretary among the States with respect to the eligible counties located in
each such State. Such allocation limitation shall be determined by the
Secretary and shall be based on—
(i)the ratio of
county payments received by a county for such fiscal year under the Secure
Rural Schools Act bears to the total amount of such payments for all eligible
counties for such fiscal year, and
(ii)the population
of a county.
The
limitation amount allocated by a State to an eligible county under this
subparagraph shall be allocated by the eligible county to qualified zone
academies within such county.(C)Designation
subject to limitation amountThe maximum aggregate face amount of
bonds issued during any calendar year which may be designated under paragraph
(1) with respect to any qualified zone academy shall not exceed the limitation
amount allocated to such academy under subparagraph (B) for such calendar
year.
(D)Carryover of
unused limitationIf for any calendar year—
(i)the limitation
amount for any eligible county, exceeds
(ii)the amount of
bonds issued during such year which are designated under paragraph (1) with
respect to qualified zone academies within such county,
the
limitation amount for such county for the following calendar year shall be
increased by the amount of such excess. Any carryforward of a limitation amount
may be carried only to the first 2 years following the unused limitation year.
For purposes of the preceding sentence, a limitation amount shall be treated as
used on a first-in first-out basis.(6)Ratable
principal amortization requiredAn issue shall be treated as
meeting the requirements of this paragraph if such issue provides for an equal
amount of principal to be paid by the issuer during each calendar year that the
issue is outstanding.
(7)Special rules
relating to expenditures
(A)An issue shall be treated as meeting the requirements of
this paragraph if, as of the date of issuance, the issuer reasonably
expects—
(i)at least 95
percent of the proceeds from the sale of the issue are to be spent for 1 or
more qualified purposes with respect to qualified zone academies within the
5-year period beginning on the date of issuance of the qualified zone academy
bond described in subsection (j),
(ii)a binding
commitment with a third party to spend at least 10 percent of the proceeds from
the sale of the issue will be incurred within the 6-month period beginning on
the date of issuance of the qualified zone academy bond described in subsection
(j), and
(iii)such purposes
will be completed with due diligence and the proceeds from the sale of the
issue will be spent with due diligence.
(B)Upon submission of a request prior to the expiration of
the period described in subparagraph (A)(i), the Secretary may extend such
period if the issuer establishes that the failure to satisfy the 5-year
requirement is due to reasonable cause and the related purposes will continue
to proceed with due diligence.
(C)Failure to
spend required amount of bond proceeds within 5 yearsTo the
extent that less than 95 percent of the proceeds of such issue are expended by
the close of the 5-year period beginning on the date of issuance (or if an
extension has been obtained under subparagraph (B), by the close of the
extended period), the issuer shall redeem all of the nonqualified bonds within
90 days after the end of such period. For purposes of this subparagraph, the
amount of the nonqualified bonds required to be redeemed shall be determined in
the same manner as under section 142.
(8)Special Rules
Relating to ArbitrageAn issue shall be treated as meeting the
requirements of this paragraph if the issuer satisfies the arbitrage
requirements of section 148 with respect to proceeds of the issue.
(9)Issuers of qualified zone academy bonds
described in subsection (j) shall submit reports similar to the reports
required under section 149(e).
(10)Application of
special rulesFor purposes of
this subsection, rules similar to the rules under paragraphs (3) and (4) of
section 54(i) shall
apply.
.
(3)No limitation
on taxpayers eligible for creditSection 1397E(a) of the Internal
Revenue Code of 1986 is amended by striking In the case of an eligible
taxpayer who holds a qualified academy zone bond
and inserting
In the case of an eligible taxpayer who holds a qualified academy zone
bond described in subsection (d) or any taxpayer who holds a qualified academy
zone bond described in subsection (j)
.
(4)
(A)So much of
subsection (d) of section 1397E of the Internal Revenue Code of 1986 as
precedes subparagraph (A) of paragraph (1) is amended to read as
follows:
(d)Qualified zone
academy bond described in subsection
(d)For purposes of this
section—
(1)The term qualified zone academy bond described in
subsection (d)means any bond issued as a part of an issue
if—
.
(B)So much of
paragraph (4) of section 1397E(d) of such Code as precedes subparagraph (A) is
amended to read as follows:
(4)For purposes of this
subsection—
.
(C)Paragraphs (1)
and (2) of section 1397E(e) of such Code are each amended by striking
national zone academy bond limitation
and inserting
national limitation for qualified zone academy bonds described in
subsection (d)
.
(D)Section 1397E(i)
of such Code is amended by inserting described in subsection (d)
after bond
.
(c)The amendments made by this section shall apply to bonds
issued after December 31, 2005.
7.Increased
limitation for deduction for higher education expenses
(a)Paragraph (2) of section 222(b) of the Internal Revenue
Code of 1986 (relating to applicable dollar limit) is amended by striking
subparagraphs (A) and (B) and inserting the following:
(A)The applicable dollar limit shall be equal to—
(i)in the case of a
taxpayer whose adjusted gross income for the taxable year does not exceed
$65,000 (twice such amount in the case of a joint return), $6,000,
(ii)in the case of a
taxpayer not described in clause (i) whose adjusted gross income for the
taxable year does not exceed $80,000 (twice such amount in the case of a joint
return), $4,000,
(iii)in the case of
a taxpayer not described in clause (i) or (ii) whose adjusted gross income for
the taxable year does not exceed $100,000 (twice such amount in the case of a
joint return), $2,000, and
(iv)in the case of
any other taxpayer, zero.
(B)
(i)In the case of any taxable year beginning after 2006, the
$6,000 amount in subparagraph (A)(i), the $4,000 amount in subparagraph
(A)(ii), and the $2,000 amount in subparagraph (A)(iii) shall each be increased
by an amount equal to—
(I)such dollar
amount, multiplied by
(II)the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting
calendar year 2005
for calendar year 1992
in
subparagraph (B) thereof.
If any amount
as adjusted under the preceding sentence is not a multiple of $100, such amount
shall be rounded to the next lowest multiple of $100.(ii)In the case of any taxable year beginning after 2006,
the $65,000 amount in subparagraph (A)(i), the $80,000 amount in subparagraph
(A)(ii), and the $100,000 amount in subparagraph (A)(iii) shall each be
increased by an amount equal to—
(I)such dollar
amount, multiplied by
(II)the
cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting
calendar year 2005
for calendar year 1992
in
subparagraph (B) thereof.
If any amount
as adjusted under the preceding sentence is not a multiple of $1,000, such
amount shall be rounded to the next lowest multiple of
$1,000..
(b)Application of
EGTRRA sunsetThe amendment made by subsection (a) shall be
subject to section 901 of the Economic Growth and Tax Relief Reconciliation Act
of 2001 to the same extent and in the same manner as the amendments made by
section 431 of such Act.
(c)The amendments made by this section shall apply to taxable
years beginning after December 31, 2005.