Expiring tax credit may become permanent
10/13/2010
By Credit.com Staff
Taxes have a large impact on Americans' finances, especially when it comes to saving for retirement, college or a home. As the cost of tuition increases, many families rely on tax credits and deductions to help pay for qualified education expenses or reduce their tax liability. To make college more affordable for individuals, President Barack Obama proposed making the temporary American Opportunity Tax Credit a permanent part of the federal budget.
The American Opportunity Tax Credit allows families to claim up to $2,500 per student for qualified education expenses, such as tuition and books. But the credit, which is part of the economic stimulus package, is due to expire at the end of 2010. President Obama's proposal would make the tax benefit permanent and span the credit's cost of $58 billion over a period of 10 years, Bloomberg reports.
"We think it sends a very important signal," Treasury Department counselor Gene Sperling told Bloomberg. "Whether we're in good times or tough times, we don't ever want to discourage families from investing in their children's future and our economic future."
Student loans are currently the highest form of debt Americans carry, highlighting the importance of money savers, such as tax credits and deductions.
