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(TRENTON) – Legislation Assembly Democrats John F. McKeon, Pamela R. Lampitt, and Patrick J. Diegnan, Jr. sponsored to offer incentives for families to save for college is going to the governor’s desk after receiving final legislative approval.
“Rising college tuitions are making it near impossible for families to save all that they should for a child’s education,” said McKeon (D-Essex). “This measure will hopefully put college within reach for more students.”
This bill (A-3337) would allow a gross income tax deduction for amounts contributed to the New Jersey Better Educational Savings Trust (NJBEST), which is the state’s IRS Section 529 qualified college savings program.
“Any incentive we can provide to promote higher educational opportunities in New Jersey is a win for our state,” said Lampitt (D-Camden). “College shouldn’t be something only the privileged can afford.”
Federal tax law allows contributions of federally taxed income to accounts established for a beneficiary’s qualified higher education expenses. Account investment earnings are not federally taxed until withdrawn, and if the earnings are used for qualified higher educational expenses they are never taxed. Currently, New Jersey matches those federal tax advantages.
The bill would allow a gross income tax deduction of up to $10,000 annually for married couples filing jointly, or $5,000 annually for other taxpayers, for contributions to one or more NJBEST accounts.
“A college education is one of the most important investments a person can make in their future,” said Assemblyman Patrick J. Diegnan, Jr. (D-Middlesex), the Assembly Education Committee chairman. “Making it easier and more cost effective to make that investment is something that should have been done years ago.”
Additionally, New Jersey currently allows $25,000 of NJBEST college savings to be excluded from a financial need evaluation of the student, and awards students who pursue higher education in New Jersey a scholarship of up to $1,500 for participating in the program.
The bill was recently approved 70-1-4 by the Assembly, giving it final legislative approval.