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Tax Credits and Incentives

Bipartisan Bill Would Allow Drug Felons Access to Education Tax Credit

Jeff Carlson  

Jeff Carlson  

A bipartisan, bicameral group of lawmakers have reintroduced legislation allowing those with felony drug convictions the right to use a primary tax credit available to students seeking a higher education—the American Opportunity Tax Credit (AOTC).

Under current law, students with such drug convictions are permanently barred from using the AOTC. Led by Maryland Senator Chris Van Hollen, the Members’ Eliminating Discrimination and Creating Corridors to Expand Student Success Act (ED ACCESS Act), originally introduced in 2019, would repeal the lifetime ban.

“That denial blocks many individuals from getting a second chance to embark on a positive path forward,” said Van Hollen in a press release. “Our ED ACCESS Act would right this wrong and provide these students with crucial support to obtain a post-secondary education.”

Supporters of the bill point to studies which have shown education significantly reduces rates of recidivism. “A fair tax code means providing Americans who have served their time a chance to pursue higher education and a promising career path,” said Senate Finance Committee Chairman Ron Wyden. The Oregon Democrat is a co-sponsor of the legislation.

The AOTC is worth up to $2,500 per year, and unlike other education tax benefits, up to $1,000 of the AOTC is refundable. This means that lower-income taxpayers can receive a benefit even if they have no federal income tax liability. Students are eligible for the AOTC if they have completed less than four years of post-secondary education; are pursuing a degree or credential; and are enrolled at least half time. A federal or state felony drug conviction makes students permanently ineligible for the AOTC. The AOTC felony drug ban dates to Georgia state law in the 1990s, when the state created the Hope Scholarship but prohibited it from going to students with drug convictions.

Other co-sponsors of the bill include Senate Finance Committee member Rob Portman, an Ohio Republican and Senator Jeff Merkley Democrat of Oregon. House members cosponsoring the bill are Ways and Means members Steven Horsford, Democrat from Nevada, Brad Wenstrup, Republican from Ohio and Alabama Democrat Terri Sewell.

For more information on the AOTC’s “no felony drug conviction” requirement, see Checkpoint’s Federal Tax Coordinator ¶A-4531.

 

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