Short title

This Act may be cited as the

Middle Class Assistance Act of 2008

Above-the-line deduction for state and local real property taxes on principal residences of taxpayers who elect not to deduct State and local income and general sales taxes

(a)

In general

Subsection (a) of section 62 of the Internal Revenue Code of 1986 (defining adjusted gross income) is amended by inserting after paragraph (21) the following new paragraph:

(22)

Deduction for state and local real property taxes on principal residences of taxpayers who do not deduct state and local income and general sales taxes

(A)

In general

In the case of an eligible individual, the deduction allowed by section 164 for State and local real property taxes to the extent such taxes are attributable to— (i)property located in the United States, and (ii)for a period that such individual (or such individual’s spouse) owned and used the property as their principal residence (within the meaning of section 121). (B)

Eligible individual

For purposes of subparagraph (A), the term eligible individual means any taxpayer who elects for the taxable year to apply section 164 without regard to— (i)the reference to State and local income taxes in section 164(a), and (ii)the election under section 164(b)(5) (relating to election to deduct State and local sales taxes in lieu of State and local income taxes).

(b)

No affect on amt

Subparagraph (A) of section 56(b)(1) of such Code is amended by adding at the end the following new sentence: Section 62(a)(22) shall not apply for purposes of the preceding sentence.. (c)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.

Refundable credit for increased 2008 home heating oil costs

(a)

In general

Subchapter B of chapter 65 of the Internal Revenue Code of 1986 (relating to rules of special application) is amended by adding at the end the following new section:

6431.

Refundable credit for increased 2008 home heating oil costs

(a)

In general

In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year of the taxpayer ending on or after December 31, 2008, an amount equal to the taxpayer’s increased 2008 home heating oil costs. (b)

Limitations

(1)

Maximum credit

The credit allowed by this section for the taxable year shall not exceed $500. (2)

Limitation based on adjusted gross income

The dollar amount applicable under paragraph (1) (determined after the application of subsection (e)(2)) shall be reduced (but not below zero) by the amount which bears the same ratio to such applicable dollar amount (as so determined) as the excess of the taxpayer’s adjusted gross income over $200,000 bears to $10,000. (c)

Eligible individual

(1)

In general

For purposes of this section, the term eligible individual means any individual whose principal residence is located in the United States. (2)

Exception

Such term shall not include— (A)any nonresident alien individual, and (B)any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins. (d)

Increased 2008 heating oil costs

For purposes of this section— (1)

In general

The term increased 2008 heating oil costs means the excess (if any) of— (A)the amount paid by the taxpayer for heating oil used to provide space heating for the principal residence of the taxpayer during 2007, over (B)the amount paid by the taxpayer for heating oil used to provide space heating for such residence during 2008. (2)

Use as principal residence for less than entire year

If the principal residence of an individual is not the same throughout 2007 and 2008, the limitation applicable to such individual under subsection (b) shall be the amount equal to— (A)such limitation (determined without regard to this paragraph), multiplied by (B)the smaller of— (i)the fraction of 2007 (determined on a daily basis) that such residence was the principal residence of the individual, or (ii)the fraction of 2008 (as so determined) that such residence was the principal residence of the individual. (3)

Renters

In the case of an individual who occupies a unit in a building as a tenant, such individual shall be treated as paying the individual’s allocable share (determined as provided by the Secretary) of the heating oil used to provide space heating for such building. (4)

Heating oil not used throughout period

If substantially all of the space heating for a residence is not provided by heating oil consumed at such residence throughout 2007 and 2008, the application of this section shall be determined under regulations prescribed by the Secretary. (e)

Special rules

(1)

Denial of double benefit

No deduction shall be allowed for the amount described in subsection (d)(1)(B) (otherwise allowable as a deduction for the taxable year) which is equal to the amount of the credit determined for such taxable year under this section. (2)

Dollar amount in case of joint occupancy

In the case of a dwelling unit which is the principal residence by 2 or more individuals, the dollar limitation under subsection (b)(1) shall be allocated among such individuals in proportion to their respective payments of the 2008 heating oil costs. (3)

Certain other rules to apply

Rules similar to the rules of paragraphs (5), (6), and (7) of section 25D(e) shall apply for purposes of this section. (f)

Principal residence

For purposes of this section, the term principal residence has the meaning given to such term by section 121; except that no ownership requirement shall be imposed. (g)

Treatment as Refundable Credit

For purposes of this title, the credit allowed by this section shall be treated as a credit allowed under subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits).

(b)

Technical amendments

(1)Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting or 6431 after section 35. (2)The table of sections for chapter 65 of such Code is amended by adding at the end the following new item:

Sec. 6431. Refundable credit for increased 2008 home heating oil costs..

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

Deduction for tuition and related expenses increased and made permanent

(a)

Deduction made permanent

Section 222 of the Internal Revenue Code of 1986 (relating to qualified tuition and related expenses) is amended by striking subsection (e). (b)

Deduction increased

Subsection (b) section 222 of such Code is amended to read as follows:

(b)

Dollar limitations

(1)

Joint returns

The expenses of each student which may be taken into account under this section for any taxable year shall not exceed the applicable limit determined in accordance with the following table: The applicableIf adjusted gross income—limit is—Does not exceed $130,000$6,000Exceeds $130,000 but does not exceed $160,000$3,000Exceeds $160,000 but does not exceed $200,000$1,500Exceeds $200,0000.

(2)

Other taxpayers

In the case of taxpayers not filing a joint return, the table contained in paragraph (1) shall be applied by substituting amounts of adjusted gross income which are ½ of the amounts contained therein. (3)

Adjusted gross income

For purposes of this subsection, adjusted gross income shall be determined— (A)without regard to this section and sections 199, 911, 931, and 933, and (B)after application of sections 86, 135, 137, 219, 221, and 469.

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.