Segal AmeriCorps Educational Award Tax Relief Act of 2026
- Bill Number
- H.R. 7878
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-09: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-03-11T23:02:32Z
AI-Generated Summary
H.R. 7878: Segal AmeriCorps Educational Award Tax Relief Act of 2026
Purpose
This bill aims to provide tax relief for recipients of AmeriCorps educational awards by excluding them from federal income taxes. AmeriCorps is a national service program where participants perform community service in exchange for educational benefits, such as awards that can fund education or repay student loans. The legislation seeks to make these awards fully tax-free to encourage participation in public service.
Key Provisions
- Exclusion from Gross Income for Awards: Amends Section 117(c)(2) of the Internal Revenue Code (IRC) of 1986 to add AmeriCorps educational awards—specifically those under subtitle D of title I of the National and Community Service Act of 1990—as a new category exempt from being counted as taxable income. This applies to awards received in taxable years ending after the date of enactment.
- Exclusion for Student Loan Repayments: Adds a new paragraph to Section 108(f) of the IRC, stating that amounts received under AmeriCorps awards used to discharge (forgive or pay off) student loan debt are not included in gross income. This exemption applies to loan discharges in taxable years ending after enactment.
- Effective Dates: The changes take effect for taxable years following the bill's enactment, ensuring immediate applicability to future awards and repayments.
Significant Changes to Existing Law
- Prior to this bill, AmeriCorps educational awards were generally treated as taxable income under the IRC, similar to scholarships or other benefits that exceed qualified education expenses. This legislation removes that taxability, aligning these awards with other tax-exempt educational benefits like certain Pell Grants.
- It expands the scope of tax exclusions in Sections 117 and 108 of the IRC, which previously did not specifically address national service awards, potentially reducing the tax burden on participants who use awards for tuition or loan repayment.
Potential Impacts
- On Citizens: AmeriCorps participants (often young adults or those entering public service) will retain the full value of their awards without owing federal income taxes, increasing the financial incentive to join the program. This could make higher education or debt relief more accessible for lower- and middle-income individuals.
- On Government Agencies: The Internal Revenue Service (IRS) will see a minor reduction in tax revenue from these awards, but the Corporation for National and Community Service (which administers AmeriCorps) may experience growth in program enrollment. No direct impact on international relations is anticipated, as this is a domestic tax policy focused on U.S. national service.
- Broader Effects: Could lead to increased participation in community service initiatives, indirectly benefiting local communities through more volunteer efforts, though the overall revenue loss to the federal government is likely small given the scale of AmeriCorps awards.
Main Stakeholders Affected
- Primary Beneficiaries: Current and former AmeriCorps members, particularly those using awards for education or student loans, who will save on taxes (e.g., an award of up to $6,895 per year of service becomes fully tax-free).
- Government Entities: IRS (reduced tax collections), Congress (potential future budget adjustments), and AmeriCorps administrators (possible program expansion).
- Other Groups: Educational institutions and student loan providers may see indirect benefits from increased award usage, while taxpayers at large could face negligible revenue impacts but support for social programs.
Notable Legal, Constitutional, or Political Implications
- Legal: This is a straightforward tax code amendment that fits within Congress's authority under Article I, Section 8 of the U.S. Constitution to levy and regulate taxes. It promotes equity in tax treatment for public service benefits without creating new entitlements.
- Constitutional: No apparent challenges; it aligns with precedents exempting certain public benefits from taxation (e.g., veterans' benefits) and does not infringe on free speech, privacy, or other rights.
- Political: The bill, introduced by bipartisan sponsors (Representatives Larson and Bacon), reflects support for national service programs amid ongoing debates on student debt relief and tax incentives for civic engagement. It could set a precedent for tax exemptions on similar volunteer or service-based awards, potentially influencing future legislation on education funding or public service incentives.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Recent Actions
- 2026-03-09: Referred to the House Committee on Ways and Means.
- 2026-03-09: Introduced in House
- 2026-03-09: Introduced in House
Bill Versions
- Segal AmeriCorps Educational Award Tax Relief Act of 2026 — issued 2026-03-09 — PDF (2 pages)