WASHINGTON — Before pursuing a doctoral degree in art history, Rachael Vause determined that a tuition waiver, a $22,500 stipend and the ability to deduct the interest on her previous graduate school loans would allow her to enroll in a four-year program at the University of Delaware.
Benjamin Franklin Kepley, 80, a retired Navy surgeon, decided he and his wife could sell their house in Florida and move into a continuing care retirement community because they could deduct a portion of the cost as a prepaid medical expense.
And Jim Flanagan, a senior vice president at St. Anselm College in New Hampshire, passed up several higher-paying jobs that would enable him to build a bigger nest egg because his current post let him send his children to college tuition-free.
Now, Washington is considering changing those rules as part of a $1.5 trillion tax package moving through Congress, targeting for elimination provisions that people like Ms. Vause, Mr. Kepley and Mr. Flanagan relied on to make what they believed were financially responsible decisions.
In ways large and small, the tax bills moving through Congress could penalize individuals for choices they made based on longstanding law. Left unchanged, the bills could drastically alter the financial situations of millions of Americans who cannot easily undo those decisions.
People who took out student loans did so knowing they could deduct the interest payments on that debt. Graduate students who accepted tuition waivers did so knowing they would not have to pay taxes on that benefit. Families who moved to high-tax states so their children could attend good public schools did so knowing they could deduct the state and local taxes paid.
But the tax bills, particularly the House version of the legislation, would rescind or scale back some of those preferences, resulting in a tax increase for many students, older adults and others who itemize their taxes and make use of many of the deductions that have long been a staple of the tax code.
On Wednesday, Republican lawmakers said they had reached a deal on a consensus version of the bill, which could head to a final vote next week. While official details were not released, a congressional aide said the medical expense deduction and the graduate tuition waiver tax break were likely to be preserved.
Still, those watching the debate said that longstanding tax provisions were on the chopping block at all showed the peril of making financial decisions based on the tax code.
“Nothing is written in stone,” said Richard L. Kaplan, a tax professor at the University of Illinois College of Law who specializes in elder law. “When you change the rules in the middle of the game, people are naturally going to say, ‘What am I supposed to do now?’” he said, adding, “It certainly makes people think this is unfair.”
Altering the law is often aimed at shifting the behavior and decision-making of individuals and corporations. But, in many instances, Congress tries to ensure the effect largely influences future decisions, or it takes steps to lessen the immediate blow.
“Sometimes things are grandfathered in and sometimes they are not,” said Mark J. Mazur, a director at the Tax Policy Center. “But what Congress sometimes tries to do is, if a change is going to affect economic behavior in a predictable way, then they try to make the change prospective.”
That is the approach the House bill takes to the mortgage interest deduction, which it proposes capping at $500,000, down from the current limit of $1 million. The change would apply only to new home purchases and is to be in effect as of November 2017, when the bill was introduced.
But the House version does not include a similar caveat for other changes it makes to individual tax deductions, and most observers expect the deductions for medical expenses, student loan interest, tuition waivers and state and local taxes to go into effect on Jan. 1. While that change is prospective, it has consequences for past decisions.
The changes, if enacted, would hit students like Ms. Vause particularly hard. As a Ph.D. candidate, she receives a $22,500 stipend and pays $1,349 in taxes on that amount. She also receives a tax-free waiver for the program’s $31,860 tuition cost. If the House provisions go into effect, she will be taxed as if she earns more than $54,000 a year, which she said would raise her tax bill to $6,729.
She would also be required to pay interest on the student loans she took out to complete a master’s degree at Temple University. While the loan payments are deferred during her doctoral program, the interest on those loans continues to accrue and she would no longer be able to deduct portions of that cost once the payments restart.
“I’m older than many of my classmates,” said Ms. Vause, 39. “I have no parental support. I’m supporting myself, and I’m halfway through my program. To suddenly make these changes, well, the bill would not allow me to complete my degree.”
Even people with financial resources may find their careful fiscal planning upended. Two years ago, Mr. Kepley, who uses a power-assisted wheelchair, moved into a retirement community so that he and his wife would be cared for should their health deteriorate. The community requires a hefty entry fee and a monthly payment, which gives residents lifelong access to an independent living center, nursing home and an Alzheimer’s unit.
Mr. Kepley said he was initially deterred by the cost, but friends who had already made the move explained that it was basically an insurance policy against future health problems and that he could deduct some of the fee as a prepaid medical expense.
“That’s the advantage: That ahead of time, I can afford this and know that if I progress in these various phases, I will not have to worry about paying for it,” Mr. Kepley said. “The tax benefit was a factor in my decision.”
Mr. Kaplan said there was a certain irony that the bill would punish people like Mr. Kepley, who were trying to avoid running out of money and winding up on Medicaid.
“They were the ones doing the fiscal personal responsibility thing, and then they turn around and say we’re changing policy that’s been in place for decades,” he said. The medical expense deduction, he added, “is a huge financial factor in the sense of making the cost work.”
Educators in particular said they are concerned that even if the provisions survive this round, they could face elimination down the road.
“When I first heard about this, I said to myself, ‘It can’t be true. Congress would never go after a benefit that at the end of the day is going to provide so little income from a tax perspective,’” said Mr. Flanagan, who has worked at St. Anselm for almost two decades. With a son just starting college and two other children close behind, Mr. Flanagan said he feared that the perk he has relied on to help pay for college may soon be taxed, requiring that he and his wife shell out money they had not budgeted for.
“When we had our first child, the tuition benefit became important, and we said to ourselves we don’t really have to save as much,” he said.
Mr. Flanagan said he and his wife decided they could send their son to Fordham University in New York, despite high rents and living expenses, because they would not have to pay tuition or taxes on the benefit. St. Anselm is part of the Council of Independent Colleges, which allows employees to use tuition waivers at other schools in the network.
“I have been in higher education for almost 30 years, and I have never seen this kind of approach to education,” said Steven DiSalvo, the president of St. Anselm, adding, “It’s mind-boggling to think that we would want to negatively impact the ability to educate our children by taxing a benefit.”