Segal AmeriCorps Education Award Tax Relief Act of 2026
- Sponsor
- Sen. Bennet, Michael F. [D-CO]
- Committees
- Finance Committee (primary)
- Last action
- Sep 24, 2026
Bottom line
This bill aims to increase the financial benefit and attractiveness of AmeriCorps service by exempting its educational awards from federal income tax.
What it actually does
This bill amends the Internal Revenue Code of 1986 to make national service educational awards received under AmeriCorps programs tax-exempt. Specifically, it excludes these awards from an individual's gross income and clarifies that any student loan debt discharged using these awards will also not be considered taxable income. These changes apply to taxable years ending after the bill's enactment.
Proponents argue
Supporters argue that taxing AmeriCorps educational awards diminishes their value, creating an unnecessary financial burden for individuals who have dedicated their time to public service. Exempting these awards would maximize the benefit for AmeriCorps members, making national service more accessible and appealing, especially for those from lower-income backgrounds or with significant student loan debt, thereby strengthening the program.
Opponents contend
Critics might argue that while supporting national service is laudable, creating new tax exclusions erodes the tax base and could lead to calls for similar exemptions for other types of educational assistance or public service benefits, complicating the tax code. Some might also contend that the existing tax system already provides mechanisms for educational expense deductions or credits, and a blanket exclusion is not the most fiscally responsible approach.
The bill text is very short and can be read quickly, allowing ample time for readers to understand its provisions.
Section 2(a)
Exclusion of AmeriCorps Educational Awards from Gross Income
This section amends Section 117(c) of the Internal Revenue Code to explicitly state that national service educational awards, such as the Segal AmeriCorps Education Award, are not considered gross income for tax purposes. This means AmeriCorps members will not have to pay federal income tax on these awards when they receive them, effectively increasing the net value of their compensation for service.
Supporters argue
Supporters argue this provision directly increases the financial incentive for national service by ensuring the full value of the award goes to the member, rather than being reduced by taxes. This makes AmeriCorps more attractive and financially viable for participants, especially those from diverse economic backgrounds.
Critics contend
Opponents might argue that this creates a specific carve-out in the tax code, potentially setting a precedent for other groups seeking similar exemptions, and that all income, regardless of source, should generally be subject to taxation to maintain a broad tax base.
Tradeoffs
The tension lies between providing a direct financial benefit to national service participants to encourage civic engagement and maintaining a comprehensive and equitable tax base.
Section 2(b)
Exclusion of Student Loan Debt Discharge from Gross Income
This section amends Section 108(f) of the Internal Revenue Code to clarify that if an individual uses a national service educational award to pay off student loan debt, the amount of debt discharged through this mechanism will not be considered gross income. This prevents a 'phantom income' tax liability that could otherwise arise from debt forgiveness, ensuring the full value of the award is applied to debt relief without an additional tax burden.