A White House official, speaking on condition of anonymity, said the issue had become a distraction from the president’s broader plan to expand and simplify tax breaks for education.

The administration’s quick retreat on the proposal emphasizes the difficulty of changing popular tax breaks, even in ways that lower the overall tax burden.

Republicans had pounced on the proposal, saying the administration was raising taxes for middle-class savers.

“This tax would have hurt middle-class families already struggling to get ahead,” House Speaker John Boehner of Ohio said in a statement.