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New Senate Tax Plan Doubles Teachers' Deduction for Buying Classroom Supplies

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UPDATED

A revised Senate tax reform proposal released Tuesday would double the deduction teachers can take for buying supplies for their classrooms.

The bill's changes would allow teachers to deduct $500 from their taxable income for purchases they make out of pocket for their classrooms, from pencils to software. Current law allows individual teachers to take a $250 deduction for those purchases. The new $500 deduction would take effect for income earned in 2018.

The deduction is "above the line" on tax forms, meaning that teachers don't need to itemize their federal tax returns in order to claim it.

The House GOP tax bill, meanwhile, would scrap the deduction. The House approved its tax bill by a vote of 227-205 on Thursday. 

Sen. Susan Collins, R-Maine, seen as one of the few Republicans who could block a tax bill in the Senate, helped introduce the $250 educator deduction into the tax code back in 2002. 

The revised Senate proposal makes numerous changes from the earlier plan, including lower individual income tax rates (those lower rates would sunset in 2025) and the repeal of the mandate for individuals to buy health insurance until 2025. 

When we did a rough analysis of the House tax plan last week, we found that both the typical teacher and the typical first-year teacher could get tax cuts

For a discussion of the teacher deduction and other education issues where tax reform could have an impact, watch this video below that we put together when the House but not the Senate tax plan had been released. 

In addition, the Senate bill increases the child tax credit from $1,000 to $2,000. It also aligns with the House tax bill that would allow people to open 529 savings plans for college while a child is "in utero."

Photo: Senate Majority Leader Mitch McConnell, R-Ky., Senate Finance Committee Chairman Orrin Hatch, R-Utah, and Treasury Secretary Steven Mnuchin, speak to reporters as work gets underway on the Senate's version of the GOP tax reform bill on Nov. 9 in Washington. (J. Scott Applewhite/AP)

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