Tax Reform and the New School Year
As students start classes and a new school year begins, I wanted to take this opportunity to share a few thoughts on the new opportunities available to students and their parents this year.
Thanks to tax reform, our economy is growing like never before – that means that this year, parents can save more money for their children’s education and students are finding better job options than we’ve seen in decades. In fact, youth unemployment just hit a 52-year low, which means that more young Americans are finding their first jobs and other opportunities to build the skills that will serve them throughout their working lives.
As a mother, grandmother and former teacher, I understand that children can have different needs. I believe that parents should have choices about the kinds of schools their kids attend and how they supplement their education at home. As our economy changes, our education system should be flexible enough to adapt as well.
Thanks to the Republican tax law, now parents can start a 529 savings account for their children’s K-12 education. Previously, tax-free 529 accounts were only available to save for college.
Let me briefly explain how these accounts work. Parents, grandparents, aunts, uncles, and others may open a 529 tax-advantaged savings account for a child as soon as he or she is born and may contribute up to $10,000 per year. The earnings in this account may accumulate tax-free as long as the money is used for qualified education purposes. The savings may be used to pay for tuition, fees, or books at elementary or secondary schools. Now, these expanded accounts allow family members to save more money for education, putting decisions back in the hands of parents who know best what kind of education their children need.
This year, our strong economy has empowered people to start new careers or change jobs. Because of tax reform, businesses are expanding, investing more in their employees, and contributing to their communities. As a result, workers are finding more job opportunities. There are 6.7 million open jobs right now, and this summer marked the lowest midsummer joblessness rate for youth between the ages of 16-24 since July 1966. For many young people, that first job is an important part of their education.
There is also good news to help people with disabilities start and keep a job. According to a recent study, 70 percent of Americans with disabilities are looking for a job, but only about one-third find it. The Tax Cuts and Jobs Act -- also known as tax reform -- knocks down barriers that are trapping people with disabilities in poverty. Two bills, ABLE to Work and ABLE Financial Planning were signed into law as part of tax reform to expand on the ABLE Act of 2014 that created tax-free savings accounts for job training, education and disability-related expenses. These accounts allow individuals with disabilities to save up to $15,000 per year in tax-advantaged accounts that will not affect their eligibility to receive government assistance or benefits. Now beneficiaries with ABLE accounts can save even more of their earnings and rollover unused 529 education savings dollars into their ABLE accounts.
Expanded 529 savings accounts, ABLE accounts, and historically low levels of youth unemployment are just a few of many reasons to celebrate going back to school this year. Because Republicans made sure these provisions part of tax reform, our children have more choices and opportunities to thrive in a growing economy that allows them to achieve their dreams and reach their full potential.
Member of Congress