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Obama drops plan to end tax break for 529 plans

By Danielle Haynes
Obama drops plan to end tax break for 529 plans
President Barack Obama dropped plans to cut tax breaks for 529 college savings plans. Photo by Kevin Dietsch/UPI | License Photo

WASHINGTON, Jan. 27 (UPI) -- U.S. President Barack Obama on Tuesday dropped plans to end tax breaks for 529 college savings plan after backlash from parents and lawmakers on both sides of the aisle.

The president proposed the idea in his budget, but withdrew it after both House Speaker John A. Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif., expressed opposition to the plan.

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"Given it has become such a distraction, we're not going to ask Congress to pass the 529 provision so that they can instead focus on delivering a larger package of education tax relief that has bipartisan support, as well as the President's broader package of tax relief for child care and working families," a White House official said.

The White House said fewer than 3 percent of Americans use 529 accounts and 70 percent of those who do earn more than $200,000 per year.

Under Obama's former proposal, the 529 tax break, which largely helps the wealthy, would be translated into a tuition tax credit that would have helped the middle class.

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