# Making College Free for All: Fair Taxes on Big Corporations Pay the Bill

**Simple Breakdown**: Imagine no more student loans crushing your future—college is free, and old debts vanish. This bill funds it all by charging huge companies (like Amazon) an extra 5% tax on profits over $1 billion a year. To stop them from dodging with tricks like fake losses from big loans, it tightens rules on deductions and forces a "real profits" tax. The cash flows directly: about 1/4 to free public college (with a startup boost for more students), 3/4 to erase $1.8 trillion in debt over 7 years. Extra money covers rising costs, and the IRS gets tools to enforce it—no loopholes, just fair play.

### H.R. [XXXX] - Education Affordability and Corporate Accountability Act of 2026 (Consolidated Original with Amendments)

**119th Congress**  
**1st Session**  
**H.R. [XXXX]**  

To provide tuition-free postsecondary education for all eligible U.S. citizens, forgive outstanding federal student loan debt, fund these initiatives through a progressive corporate surtax with robust anti-loophole protections, and ensure equitable enforcement, and for other purposes.

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#### Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

##### SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
**(a) Short Title.**—This Act may be cited as the "Education Affordability and Corporate Accountability Act of 2026".

**(b) Table of Contents.**—The table of contents for this Act is as follows:  
Sec. 1. Short title; table of contents.  
Sec. 2. Corporate surtax on adjusted taxable income to fund free education and debt relief.  
Sec. 3. Enhanced limitation on business interest expense deductions.  
Sec. 4. Expansion of corporate alternative minimum tax on adjusted financial statement income.  
Sec. 5. Limitation on net operating loss carryforwards and related-party debt.  
Sec. 6. Allocation of revenues for postsecondary education and student debt forgiveness.  
Sec. 7. Enforcement and reporting requirements.  
Sec. 8. Definitions.  
Sec. 9. Effective date.

##### SECTION 2. CORPORATE SURTAX ON ADJUSTED TAXABLE INCOME TO FUND FREE EDUCATION AND DEBT RELIEF.
**(a) In General.**—Subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to imposition of tax) is amended by adding at the end the following new section:

**"SEC. 59C. SURTAX ON ADJUSTED TAXABLE INCOME OF CERTAIN CORPORATIONS.  
**(a) Imposition of Tax.**—In addition to any other tax imposed by this chapter, there is hereby imposed on the adjusted taxable income of any applicable corporation for any taxable year a tax equal to 5 percent of so much of such adjusted taxable income as exceeds $1,000,000,000.  
**(b) Adjusted Taxable Income.**—For purposes of this section—  
**(1) In general.**—The term 'adjusted taxable income' means the taxable income of the corporation for the taxable year determined without regard to—  
**(A) any deduction allowed under section 163(j) (relating to limitation on business interest expense),  
**(B) any net operating loss deduction under section 172,  
**(C) any deduction for taxes imposed under this section, and  
**(D) any adjustments under sections 3, 4, or 5 of the Education Affordability and Corporate Accountability Act of 2026.  
**(2) Special rules.**—Adjusted taxable income shall be determined after application of the corporate alternative minimum tax under section 55(d).  
**(c) Applicable Corporation.**—The term 'applicable corporation' means any C corporation (as defined in section 1361(a)(2)) with average annual gross receipts of $1,000,000,000 or more for the 3-taxable-year period ending with the taxable year preceding the taxable year.  
**(d) Regulations.**—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including rules to prevent avoidance through debt financing, loss carryforwards, or transfer pricing."**

**(b) Clerical Amendment.**—The table of sections for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:  
"Sec. 59C. Surtax on adjusted taxable income of certain corporations.".

**(c) Projected Revenue.**—The surtax under this section, in conjunction with sections 3 through 5, is estimated to generate not less than $420,000,000,000 annually, adjusted for inflation using the Chained Consumer Price Index for All Urban Consumers, to fully fund the programs under section 6 without revenue shortfalls due to avoidance.

##### SECTION 3. ENHANCED LIMITATION ON BUSINESS INTEREST EXPENSE DEDUCTIONS.
**(a) In General.**—Section 163(j)(1) of the Internal Revenue Code of 1986 (relating to limitation on business interest) is amended to read as follows:  
**(1) In general.**—The amount allowed as a deduction under this chapter for any taxable year for business interest expense shall not exceed the sum of—  
**(A) the business interest income of the taxpayer for such taxable year,  
**(B) 20 percent of the adjusted taxable income of the taxpayer for such taxable year, plus  
**(C) the floor plan financing interest expense of the taxpayer for such taxable year.**

**(b) Thin Capitalization Rule.**—Section 163(j) of such Code is amended by adding at the end the following new paragraph:  
**(11) Thin capitalization limitation.**—No deduction shall be allowed under this section for interest expense paid or accrued on indebtedness if the debt-to-equity ratio of the taxpayer exceeds 4:1 at the close of the taxable year. For purposes of this paragraph, debt-to-equity ratio shall be determined based on the taxpayer's consolidated financial statements under generally accepted accounting principles (GAAP). The Secretary shall issue guidance to prevent circumvention through subsidiary debt or related-party arrangements.".

**(c) Conforming Amendments.**—Section 163(j)(D) of such Code is amended by striking "30 percent" and inserting "20 percent" in all references to the business interest limitation percentage.

**(d) Purpose.**—The amendments made by this section enhance the existing limitation on interest deductions under section 163(j) of the Internal Revenue Code of 1986, as modified by the Tax Cuts and Jobs Act of 2017 and subsequent legislation, to curb the use of excessive leverage and related-party debt for tax avoidance, ensuring corporations contribute fairly to education funding.

##### SECTION 4. EXPANSION OF CORPORATE ALTERNATIVE MINIMUM TAX ON ADJUSTED FINANCIAL STATEMENT INCOME.
**(a) In General.**—Section 55 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:  
**(d) Corporate Alternative Minimum Tax.**—  
**(1) Imposition of tax.**—In the case of an applicable corporation, there is hereby imposed for the taxable year a tax equal to 15 percent of the excess (if any) of—  
**(A) the adjusted financial statement income of the corporation for the taxable year, over  
**(B) the corporate alternative minimum tax foreign tax credit for such taxable year.  
**(2) Applicable corporation.**—The term 'applicable corporation' means any corporation (other than a regulated investment company, a real estate investment trust, or an S corporation) with average annual adjusted financial statement income in excess of $1,000,000,000 for the 3-taxable-year period ending with the taxable year.  
**(3) Adjusted financial statement income.**—The term 'adjusted financial statement income' means, with respect to any corporation for any taxable year, the net income of such corporation for such taxable year as set forth on its applicable financial statement (as defined in section 451(b)(3)), adjusted as provided by the Secretary to prevent avoidance of the purposes of this subsection, including specific adjustments for disallowed interest deductions under section 163(j), net operating losses under section 172, and related-party transactions.".

**(b) Purpose.**—The amendments made by this section build upon and expand the corporate alternative minimum tax established under section 1016 of the Inflation Reduction Act of 2022 to impose a floor on tax liability based on economic (book) income, preventing profitable corporations from using accounting manipulations, such as debt-financed losses or accelerated depreciation, to evade the surtax under section 2.

##### SECTION 5. LIMITATION ON NET OPERATING LOSS CARRYFORWARDS AND RELATED-PARTY DEBT.
**(a) Limitation on Net Operating Loss Carryforwards.**—Section 172(a)(2) of the Internal Revenue Code of 1986 (relating to net operating loss deduction) is amended by adding at the end the following new subparagraph:  
**(D) Special limitation for applicable corporations.**—In the case of an applicable corporation (as defined in section 59C(c)), the amount of the net operating loss deduction for any taxable year shall not exceed 80 percent of taxable income (determined without regard to the deduction allowed under this section). Any disallowed loss may not be carried forward to offset more than 50 percent of taxable income in subsequent years. Losses attributable to disallowed interest deductions under section 163(j) shall be ineligible for carryforward.".

**(b) Restrictions on Related-Party Debt.**—Section 163(j) of such Code, as amended by section 3(b), is further amended by adding after paragraph (11) the following new paragraph:  
**(12) Related-party debt disallowance.**—No deduction shall be allowed for interest expense paid or accrued to a related party (as defined in section 267(b)) if the payee is located in a jurisdiction with an effective tax rate below 15 percent. The Secretary shall deny deductions for any debt arrangements designed to shift income offshore, including through base erosion and anti-abuse tax (BEAT) enhancements under section 59A.".

**(c) Purpose.**—This section restricts the perpetual deferral of taxes through loss carryforwards generated by interest deductions or other avoidance strategies and prohibits interest deductions on debt to low-tax related parties, ensuring stable revenue for education and debt relief.

##### SECTION 6. ALLOCATION OF REVENUES FOR POSTSECONDARY EDUCATION AND STUDENT DEBT FORGIVENESS.
**(a) Free Postsecondary Education Fund.**—Of the revenues generated under sections 2, 3, 4, and 5—  
**(1) 27 percent shall be allocated annually to a "Free Postsecondary Education Fund" administered by the Department of Education to provide tuition-free attendance (including fees, books, and supplies up to a capped amount) at public postsecondary institutions (community colleges, 4-year universities, and vocational programs) for all eligible U.S. citizens, with priority for low- and middle-income students. This allocation includes a 20 percent buffer for enrollment surges, program expansions, and inflation (estimated baseline: $96,000,000,000 annually post-initial implementation).  
**(2) An initial surge allocation of $180,000,000,000 for fiscal year 2026 and $180,000,000,000 for fiscal year 2027 to support anticipated enrollment increases of up to 20 percent, followed by a linear taper to the baseline over years 3-7.  

**(b) Student Debt Forgiveness Fund.**—The remaining 73 percent shall be allocated to a "Student Debt Forgiveness Fund" administered jointly by the Department of Education and the Department of the Treasury to forgive the outstanding $1,810,000,000,000 in federal student loan debt (as of October 2025) over 7 years at $258,000,000,000 annually. Forgiveness shall be implemented on a pro-rata basis by borrower balance, with full discharge for balances under $10,000 in year 1, and interest accrual paused upon enactment. Any surplus revenues post-year 7 shall redirect to the Education Fund or a rainy-day reserve for higher education costs.  

**(c) Administration and Oversight.**—The Secretary of Education, in consultation with the Secretary of the Treasury and an independent advisory board including student representatives and fiscal experts, shall administer the funds. Revenues shall be transferred quarterly from the general fund of the Treasury to dedicated trust funds. Annual audits by the Government Accountability Office (GAO) shall ensure compliance and cost-effectiveness.

##### SECTION 7. ENFORCEMENT AND REPORTING REQUIREMENTS.
**(a) IRS Enforcement.**—There is authorized to be appropriated $5,000,000,000 over 5 years (beginning in fiscal year 2026) to the Internal Revenue Service, specifically for the Large Business and International Division, to conduct audits, investigations, and enforcement actions related to sections 2 through 5, with a target of auditing at least 50 percent of applicable corporations annually. Funds shall prioritize detection of debt-financed avoidance and related-party transactions.  

**(b) Annual Reporting.**—Not later than 90 days after the end of each fiscal year, the Secretary of the Treasury shall submit to Congress, and make publicly available, a report detailing—  
**(1) revenues raised under sections 2 through 5;  
**(2) identified loopholes or avoidance attempts and corrective actions taken;  
**(3) enforcement outcomes, including penalties assessed; and  
**(4) projections for future revenues adjusted for economic conditions.  

**(c) Penalties for Noncompliance.**—Any applicable corporation found to have engaged in avoidance under sections 2 through 5 shall be subject to penalties equal to 200 percent of the underpaid tax, plus interest.

##### SECTION 8. DEFINITIONS.
For purposes of this Act:  
**(1) Adjusted taxable income.**—As defined in section 59C(b).  
**(2) Applicable corporation.**—As defined in section 59C(c).  
**(3) Eligible citizens.**—U.S. citizens and nationals who are at least 17 years of age and meet satisfactory academic progress standards.  
**(4) Postsecondary institution.**—Any public institution of higher education eligible for federal student aid under title IV of the Higher Education Act of 1965.

##### SECTION 9. EFFECTIVE DATE.
**(a) In General.**—Except as provided in subsection (b), the provisions of this Act (including amendments to the Internal Revenue Code of 1986) shall apply to taxable years beginning after December 31, 2025.  
**(b) Funding Provisions.**—Sections 6 and 7 shall take effect on the date of enactment, with initial allocations commencing in fiscal year 2026.