Segal AmeriCorps Educational Award Tax Relief Act of 2026
- Sponsor
- Rep. Larson, John B. [D-CT-1]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 9, 2026
Bottom line
This bill makes Segal AmeriCorps educational awards tax-exempt, aiming to increase their net value and incentivize national service by removing a federal income tax burden.
What it actually does
This bill amends the Internal Revenue Code of 1986 to exclude Segal AmeriCorps educational awards from a recipient's gross income for federal tax purposes. It also clarifies that amounts received under these awards, when used to discharge student loan debt, are not considered taxable income. The changes apply to amounts received and discharges of indebtedness in taxable years ending after the date of enactment.
Proponents argue
Proponents argue that this bill enhances the value of national service by ensuring AmeriCorps members can fully utilize their educational awards for their intended purpose without federal income tax diminishing the benefit. They contend it recognizes the significant contributions of AmeriCorps volunteers and provides greater financial relief for their education or student loan repayment, making service a more attractive option.
Opponents contend
Opponents might argue that this bill creates a new tax expenditure, reducing federal revenue, and could be seen as preferential treatment compared to other forms of educational assistance or income. They may contend that the existing tax structure is equitable and should not be selectively altered, potentially setting a precedent for other programs seeking similar exemptions.
The bill text is exceptionally short and clear, allowing for a quick and thorough understanding of its provisions.
Section 2(a)
Exclusion of AmeriCorps Awards from Gross Income
This provision amends Section 117(c)(2) of the Internal Revenue Code of 1986 to explicitly exclude national service educational awards (Segal AmeriCorps Educational Awards) from a taxpayer's gross income. This means that individuals receiving these awards will no longer be required to pay federal income tax on them, effectively increasing the net value of the award.
Supporters argue
Supporters argue this provision directly increases the financial benefit for AmeriCorps members, making national service a more viable option for individuals concerned about educational costs or student debt. It honors their service by maximizing the utility of the awards.
Critics contend
Critics might contend that this creates a specific carve-out in the tax code, potentially leading to calls for similar exemptions for other types of educational aid or service programs, and reduces the overall tax base.
Tradeoffs
The tradeoff is between providing greater financial support and recognition for national service members and the potential reduction in federal tax revenue.
Section 2(b)
Tax Exemption for Loan Debt Discharged by Awards
This provision amends Section 108(f) of the Internal Revenue Code to clarify that gross income shall not include any amount received under a national service educational award when that award is used to discharge student loan debt. This ensures that when an AmeriCorps award is applied to student loans, the discharged amount is not treated as taxable income, preventing a 'phantom income' tax burden.