H.R. 7878: Segal AmeriCorps Educational Award Tax Relief Act of 2026
Sponsor
John Larson
Democrat · CT-1
Bill Progress
Latest Action · Mar 9, 2026
Referred to the House Committee on Ways and Means.
Why it matters
AmeriCorps members earn education awards worth up to $7,395 for a year of national service — then get hit with a federal tax bill on it. At a 22% marginal rate, that's roughly $1,600 you lose before the money ever touches tuition or student loans. H.R. 7878 would end that by making Segal Education Awards tax-free, the same way GI Bill benefits already are.
The fix is simple: AmeriCorps education awards would be treated like scholarships for tax purposes — excluded from your gross income entirely. If you use the award to pay down student loans, that debt discharge is also tax-free.
No income caps. No phase-outs. No complicated formulas. If you earned the award, you keep the full amount.
The change applies to any tax year after the bill becomes law. It's not retroactive — you can't refile for past years — but going forward, every AmeriCorps alum gets the full value of what they earned. The bill is narrowly targeted: it covers Segal Education Awards only, not other scholarships or loan forgiveness programs.
What does H.R. 7878 do?
Education awards become tax-free
Your Segal Education Award gets treated like a scholarship. The IRS can no longer count it as taxable income when you use it for tuition, fees, or other education expenses.
Student loan payoff is also tax-free
If you use your award to pay down student loans, the debt discharge won't trigger a tax bill either. Right now, the IRS can treat forgiven loan amounts as income — this bill closes that gap for AmeriCorps awards.
Takes effect the year it passes
The tax-free treatment kicks in for any tax year that ends after the bill is signed into law. Not retroactive, but every future AmeriCorps cohort benefits immediately.
No income limits or caps
Unlike many tax benefits, there's no income phase-out or AGI threshold. Every AmeriCorps member who earns the award qualifies, regardless of other income.
Covers Segal Education Awards only
The bill is narrowly scoped to the national service education award under the National and Community Service Act. Other scholarships, grants, and loan forgiveness programs are not affected.
Who benefits from H.R. 7878?
Current and future AmeriCorps members
About 75,000 people serve in AmeriCorps each year. You already earn below minimum wage for the hardest work most people will never do. This bill means you actually get to keep the education award you earned — potentially $1,600 more in your pocket per award instead of writing a check to the IRS.
AmeriCorps alumni with student debt
You used your award to chip away at student loans, then got a surprise tax bill the next April for the amount that was discharged. Under this bill, that stops. The award is tax-free and the loan discharge it triggers is too.
National service recruitment pipeline
AmeriCorps already struggles to recruit because the stipend is low — you're asking people to live near the poverty line for a year of service. Taxing the education award on top of that is a financial penalty that hits hardest on people from lower-income backgrounds, exactly the volunteers the program most needs.
Who is affected by H.R. 7878?
AmeriCorps members currently paying taxes on awards
Anyone who receives a Segal Education Award after the bill passes would stop including it in taxable income. The change is automatic — no application or special filing required.
The IRS and tax preparers
The IRS would need to update guidance, and tax preparers would need to stop reporting these awards as income. Straightforward administrative change.
Federal revenue
The government would collect less tax revenue from AmeriCorps award recipients. The cost is relatively small — roughly $120 million per year in forgone revenue, based on ~75,000 awards at up to $7,395 each.
H.R. 7878 Common Questions
Are AmeriCorps education awards taxable right now?
Yes. The IRS currently treats your Segal Education Award as taxable income. On a full award of $7,395, that's roughly $1,600 in federal taxes at a 22% marginal rate. H.R. 7878 would change that by excluding the award from gross income entirely — the same treatment GI Bill benefits already get.
Would using my AmeriCorps award to pay student loans trigger a tax bill?
Not if this bill passes. H.R. 7878 specifically covers debt discharge — so if you use your Segal Education Award to pay down student loans, the forgiven amount wouldn't count as taxable income. That's a big deal, because right now loan discharge can create a surprise tax bill the following April.
When would the tax-free treatment take effect?
The change kicks in for any tax year that ends after the bill is signed into law. It's not retroactive — you can't go back and refile past returns. But every AmeriCorps member earning an award after enactment benefits immediately, no application needed.
Does this bill cover other scholarships or just AmeriCorps awards?
Just AmeriCorps. The bill is narrowly written to cover Segal Education Awards under the National and Community Service Act. Pell Grants, other scholarships, and loan forgiveness programs like PSLF are not affected.
Is there an income limit for the AmeriCorps tax exemption?
No. Unlike many tax benefits that phase out at higher incomes, H.R. 7878 has no AGI threshold or dollar cap. If you earned a Segal Education Award, you qualify regardless of your other income.
Why are AmeriCorps awards taxed when GI Bill benefits aren't?
Congress carved out a tax exemption for GI Bill education benefits decades ago but never did the same for AmeriCorps. Both programs reward national service with education funding. H.R. 7878 would close that gap by giving civilian service volunteers the same tax treatment military service members already get.
How many people serve in AmeriCorps each year?
Roughly 75,000 people serve annually across AmeriCorps programs. Most earn a Segal Education Award upon completing their term. The bill would benefit every future cohort, plus any current members who haven't yet received their award when the law takes effect.
Based on H.R. 7878 bill text
HR7878 Legislative Journey
House: Committee Action
Mar 9, 2026
Referred to the House Committee on Ways and Means.
About the Sponsor
John Larson
Democrat, Connecticut's 1st congressional district · 27 years in Congress
Committees: Ways and Means
View full profile →
Cosponsors (1)
This bill has 1 cosponsor: 1 Republican. Cosponsors represent 1 state: Nebraska.
Committee Sponsors
Ways and Means Committee
0 of 45 committee members cosponsored
No committee members have cosponsored this bill
19 Democrats across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 7878 change?
1 changes
Sections Amended
Section 108(f) of such Code
adding at the end the following new paragraph: ``(6) Payments under national service educational awards
H.R. 7878 Quick Facts
- Committee
- Ways and Means
- Chamber
- House
- Introduced
- Mar 9, 2026
Referred to the House Committee on Ways and Means.
Mar 9, 2026
Official Sources
Official portal page for the education award this bill makes tax-free
Detailed breakdown of award amounts, eligible uses, time limits, and current tax treatment
How AmeriCorps currently reports award payments to the IRS as taxable income
IRS guidance on Section 117 scholarship exclusion — the tax code provision this bill amends
Comprehensive IRS guide covering scholarship exclusions, student loan interest, and education credits
GI Bill benefits are already tax-free — this bill gives AmeriCorps awards the same treatment
The statute that authorizes AmeriCorps and the Segal Education Award
H.R. 7878 Bill Text
“To amend the Internal Revenue Code of 1986 to provide an exclusion from gross income for AmeriCorps educational awards.”
Source: U.S. Government Publishing Office
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