1. Short title This Act may be cited as the Reducing Excessive Debt and Unfair Costs of Education Act of 2018 or the REDUCE Act of 2018 . 2. Excise tax on undistributed required payouts from endowments of certain institutions of higher education (a) In general Subchapter H of chapter 42 of the Internal Revenue Code of 1986 is amended to read as follows: H Failure by certain institutions of higher education to make certain payouts Sec. 4968. Excise tax on undistributed required payouts from endowments of certain institutions of higher education. 4968. Excise tax on undistributed required payouts from endowments of certain institutions of higher education (a) Initial tax There is hereby imposed, on an undistributed required payout of a qualified institution of higher education for a taxable year, on the first day of the first academic period beginning after the close of such taxable year, a tax equal to 1.4 percent of such undistributed required payout as of such day. (b) Additional tax In any case in which an initial tax is imposed under subsection (a) on an undistributed required payout, if any portion of such undistributed required payout exists— (1) on the date which is 1 year after the date on which the initial tax was imposed, there is hereby imposed an additional tax equal to 30 percent of such undistributed required payout as of the date such tax is imposed, and (2) on the date which is 2 years after the date on which the initial tax was imposed, there is hereby imposed an additional tax equal to 100 percent of such undistributed required payout as of the date such tax is imposed. (c) Suspension of deductible contributions (1) In general No deduction shall be allowed under any provision of this title (including sections 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), and 2522) with respect to any contribution to an organization during a contribution suspension period. (2) Contribution suspension period For purposes of ths subsection, the term contribution suspension period means, with respect to any