Congress Extends Higher-Education Tax Benefit, Continues Current Spending Levels

Prior to adjourning for the last time, members of the 109th Congress voted to extend a tax benefit for families that have incurred higher-education expenses and to continue federal spending authority at current levels for the next two months.

Lawmakers extended through the 2007 tax year a maximum federal income-tax deduction of $4,000 for qualified tuition and related higher-education expenses. The maximum deduction applies to single taxpayers with incomes of $65,000 or less and married taxpayers who file jointly and have incomes of $130,000 or less. Taxpayers whose incomes exceed the limit for the full deduction may qualify for a $2,000 deduction, if their income is up to $80,000 for single tax-filers or $160,000 for married couples filing jointly.

Congress also approved a measure extending to Feb. 15, 2007, authority for federal spending at fiscal-2006 levels. The stopgap measure is needed because Congress has not yet finalized all of the appropriations bills for the 2007 fiscal year, which began Oct. 1.