Section 1 Short title
This Act may be cited as the “Decreasing Employees Burdensome Taxes from Student Loans Act of 2021” or the “DEBT Act of 2021”.
Decreasing Employees Burdensome Taxes from Student Loans Act of 2021
A BILL
To amend the Internal Revenue Code of 1986 to expand the exclusion for employer-provided educational assistance and to expand the availability of the student loan interest deduction.
Sec. 2 Exclusion for employer payment of qualified education loans
In general— Section 127(c)(1) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of subparagraph (A), by redesignating subparagraph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph:
“(B) the payment by an employer, whether paid to the employee or to a lender, of principal or interest on any qualified education loan (as defined in section 221(d)(1)) incurred by the employee, and”
Denial of double benefit— Section 221(e)(1) of such Code is amended by inserting before the period at the end the following: “, or for any amount which is excludable from gross income under section 127(c)(1)(B)”.
Effective date— The amendments made by this section shall apply to payments made by employers after December 31, 2021.
Sec. 3 Increase in maximum amount excludable under educational assistance programs
In general— The text of paragraph (2) of section 127(a) of the Internal Revenue Code of 1986 is amended by striking “$5,250” both places it appears and inserting “$10,000”.
Conforming amendment— The heading for section 127(a)(2) of such Code is amended by striking “$5,250 maximum” and inserting “Maximum”.
Effective date— The amendments made by this section shall apply to payments made by employers after December 31, 2021.
Sec. 4 Modification of deduction for interest on education loans
Increased maximum deduction— Section 221(b)(1) of the Internal Revenue Code of 1986 is amended by striking “$2,500” and inserting “$5,000”.
Increased income limitation— Section 221(b)(2)(B)(ii) of such Code is amended by striking “$15,000 ($30,000” and inserting “$85,000 ($115,000”.
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2021.