It looks like Devendorf's efforts paid off. Tuition waivers for graduate students are expected to remain tax-free. The medical deduction, which helps 8.8 million Americans with severe conditions like Alzheimer's, is also expected to remain.
“Nothing's final of any of this stuff, but we're trying to make sure that the provisions in law that are available to students for education continue to be available,” Sen. John Thune (R-S.D.), a member of the conference committee, said Wednesday.
Thune said the medical expense deduction — which allows families to deduct extraordinary medical treatment expenses above 10 percent of their income — was also likely to be in the bill, a huge relief for millions of Americans living in nursing homes or fighting cancer or other chronic diseases. That deduction is “a priority for some of our members, and we're trying to be responsive to that,” Thune said. “It was a big issue for [Sen. Susan Collins (R-Maine)] . . . I think she'll be happy with the way it comes out.”
The tax bill that the House passed in November scrapped the medical deduction entirely, a move that would have caused a jump in taxes of thousands — and in some cases tens of thousands — of dollars for millions of middle-class families. The House bill also would have made taxes go up significantly for many graduate students who receive tuition waivers in exchange for the teaching and research they do at universities. The Senate kept both provisions intact (and even made the medical deduction a bit more generous).
While the Republican tax bill would reduce taxes for the vast majority of Americans, about 7 percent would end up paying more, including some families earning $50,000 to $100,000, a group most consider middle class. Most of those potentially facing tax hikes are people who take a lot of deductions.
Devendorf is in the first year of a PhD program in clinical psychology at the University of South Florida in Tampa. His older brother committed suicide. Since then, Devendorf said, he has dedicated his life to studying psychology in the hope that he can help others with mental health issues. (Suicide is the second leading cause of death among Americans ages 15 to 34, according to the National Institute of Mental Health.)
At the university, he receives a $14,000 a year stipend and pays taxes on that income. But under the bill that passed the House, he would have to pay taxes on that stipend plus the $30,000 tuition waiver he gets from his university, even though he never actually receives any money from the waiver. Taxing the waiver would bump up his tax bill substantially, making it difficult for him to continue his studies.
“Our stipend is already super hard to live on . . . how am I going to fund myself it this passes?” he said this week. “I come from a middle-class family. This isn't a lucrative field.”
Devendorf said he is waiting to see the final bill before he truly feels relieved.
Thune said the text would likely come out Friday. Details of the final agreement between the House and Senate have started to leak out, including a bigger tax break for wealthy Americans, but senators are careful to say nothing is final until it's written down. Republicans have to keep to a tight budget: They can't exceed $1.5 trillion in costs. There were many last-minute changes that various lawmakers wanted, meaning something would have to go.
“I'm doing everything I can to fight this,” Devendorf said.
Erica Werner contributed to this report.