By Frank Messina
Recently, it seems as though every week since the GOP tax bill has passed, a new corporation is providing their employees with bonuses or additional benefits due to the lowered tax rate. While the bill has had its benefits, it also may concern many Americans due to massive changes coming for wealthier families, uncertainty about its effects on middle-class households, and the major changes from the previous administrations’ policies.
In the interest of simplifying information relevant to the Pitt community, this lists major points of policy that will change or be created that have direct effects on students, particularly at the University of Pittsburgh. This is by no means an exhaustive list, and students would do well to further investigate and research how new tax policy will affect them not only as students, but in all aspects of their lives.
For the purposes of this article, it is assumed that the average Pitt student pays most or all of their tuition with federal and private loans, and does not own a company.
While the bill had major implications for companies, for the average Pitt student, not much will change.
Firstly, news over recent weeks buzzed with how graduate students would pay income tax on their tuition waivers from the University. Currently, graduate students working in research or as teaching assistants usually receive waived tuition and a small stipend as a way to pay for expenses (food, rent, etc.).
The original version of the bill treated these waivers and stipends as a form of income, and all income becomes subject to taxation. However, recent changes to the tax bill eliminated this requirement. Graduate students will not have to pay income tax.
The GOP tax bill has also eliminated the individual mandate for health insurance. Under the Affordable Care Act, Americans require health insurance, similar to how all drivers require car insurance. Pitt students will no longer be required to have health insurance, starting in 2019. However, Pitt students have access to healthcare from the Student Health Center for the duration of their time at Pitt for a relatively small expense.
Medical deductions remain in the tax plan, different from the first draft of the bill. Deductions still apply to extraordinary medical expenses above 10 percent of a family’s income. This affects a small proportion of young people who have had large medical expenses. The tax bill expanded this program, allowing more deductions for those who qualify. Great news for those who accrue large medical bills during the school year: these deductions will stay in place and be expanded, providing a way to reduce expenses during a very difficult time for many families.
For Pitt students with children, tax credits for children changed from $1,000 to a maximum of $2,000 per child. This allows those with children to pay up to $2,000 less per child in their care. Originally, not much of this credit was refundable for the majority of Americans. With the new tax plan, working families that make under the minimum threshold to pay federal income tax now receive more tax refunds. Originally, this was about $1,100 but increased to a maximum of $1,400 per child. Working families with children will pay less in taxes per child and receive larger tax refunds.
Tax reform affects everyone differently in their personal finances. After graduation, these policies might hinder some, help some, and have no effect on others. One thing is certain, however. No tax-paying American can afford ignorance of the stipulations of the tax bill, and the effects had on your families, friends and bank accounts.