House Tax Bill Hits Mechanchim Hard, BMG Warns

The tax bill version passed by the House last month contains a provision that would devastate the finances of mechanchim, teachers, and staff of yeshivos and seminaries, Beth Medrash Govoha’s government affairs department is warning.

The House bill — which must be reconciled with a version passed last week by the Senate — completely eliminates a tuition reduction tax exemption for educators.

The Senate version would keep the exemption, a result of sustained lobbying by BMG’s government affairs department under the guidance of Rabbi Aaron Kotler, the president of BMG, and his co-chairman Howard Tzvi Friedman.

Educational institutions typically pay tuition for an employee or that employee’s children at any school, and that tuition payment does not count to their federal taxable income. In addition, this provision also affects tuition waivers given to graduate students, which could have ramifications for kollel yungeleit as well.

If this cut goes through, mechanchim and staff receiving free or reduced tuition for their children at the schools in which they themselves teach may have to pay taxes on those tuition breaks. This will also end the current ability of mechanchim to receive tax-free tuition benefits.

Compounding the pain, these tuition breaks and payments would now become part of their adjusted gross income, rendering potentially thousands of modestly paid mechanchim and school employees no longer eligible for many government benefits.

The BMG team is currently working on the conference committee that will hammer out a reconciliation bill before the end of the year.

“We sent out a call for help to our network of two dozen key askanim from coast to coast, asking everyone to call on their contacts and make a pitch for this important program,” explains Mrs. Chanie Jacobowitz, director of government affairs at Beth Medrash Govoha. “They responded with alarm and highly effective advocacy, getting the message through in a focused way to leadership at the highest levels and key members of the Conference Committee.”