Buono Bill Providing Income Tax Deduction For Contributions To College Savings Plan Clears Hurdle

Senate Committee Releases Measure to Spur Investment in NJBEST Program

TRENTON – A Senate committee today released legislation Senate Majority Leader Barbara Buono sponsored to provide residents who save for their children’s college education through a state-administered college savings plan with a state income tax deduction for their investments.

“We should be helping parents save for their children’s college education,” said Buono. “As the cost of college continues to increase, families will be relying on their savings to keep their hopes for their children’s futures alive. We need to give these families a greater incentive to put away money now, so the dream of a college education can be realized.”

Under the Buono bill (S-668) couples filing a joint tax return would be able to deduct the first $10,000 contributed annually to the New Jersey Better Educational Savings Trust (NJ BEST) program; single filers would be able to deduct up to $5,000. NJ BEST is a 529 college savings plan administered by the New Jersey Higher Education Student Assistance Authority and managed by Franklin Templeton Investments.

Under federal tax law, earnings realized through a 529 account used for qualified higher education expenses are never taxed.

The bipartisan bill also is sponsored by Senator Thomas H. Kean, Jr. (R-Union/Morris/Somerset/Union). It was unanimously released from the Senate Education Committee.

“It makes no sense that money which is not taxed when it comes out of NJ BEST would be taxed on its way in,” said Buono. “We need to make this common sense change for working families who already are saving whatever they can to do right for their kids’ futures.”

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