Bill Text: NJ A1825 | 2010-2011 | Regular Session | Introduced
Bill Title: Allows gross income tax credit for certain contributions to New Jersey Better Educational Savings Trust (NJBEST) Program and to certain other federally qualified tuition savings programs.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2010-01-12 - Introduced, Referred to Assembly Appropriations Committee [A1825 Detail]
Download: New_Jersey-2010-A1825-Introduced.html
STATE OF NEW JERSEY
214th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2010 SESSION
Sponsored by:
Assemblywoman CAROLINE CASAGRANDE
District 12 (Mercer and Monmouth)
Assemblyman DECLAN J. O'SCANLON, JR.
District 12 (Mercer and Monmouth)
SYNOPSIS
Allows gross income tax credit for certain contributions to New Jersey Better Educational Savings Trust (NJBEST) Program and to certain other federally qualified tuition savings programs.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel
An Act allowing a gross income tax credit for certain contributions to the New Jersey Better Educational Savings Trust (NJBEST) Program and to certain other federally qualified tuition savings programs, supplementing Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A taxpayer shall be allowed a credit against the tax otherwise due under the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq., for a percentage of the taxpayer's contribution for the taxable year to one or more accounts established: (1) pursuant to the "New Jersey Better Educational Savings Trust (NJBEST) Program," (N.J.S.18A:71B-35 et seq.); or (2) in compliance with subsection (b) of section 529 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529, or a tuition credit or certificate purchased pursuant to any such program.
b. The amount of credit allowed under this section shall be equal to 10 percent of the aggregate amount of the taxpayer's contribution for the taxable year which is less than or equal to $5,000, plus five percent of the aggregate amount of the taxpayer's contribution for the taxable year which is greater than $5,000 but less than or equal to $10,000.
c. Notwithstanding the provisions of subsection b. of this section, a married person filing separately shall, unless otherwise ineligible, be entitled to one-half of the credit allowed under this section.
d. The amount of any credit otherwise allowable under this section that cannot be applied for the taxable year may be carried forward to the three taxable years following the taxable year for which the credit was allowed.
2. This act shall take effect immediately and shall apply to contributions made for taxable years beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill allows a credit against the New Jersey gross income tax for certain contributions to the New Jersey Better Educational Savings Trust (NJBEST) Program and to certain other federally qualified tuition savings programs.
Under the bill, taxpayers are eligible to receive a credit for a percentage of the taxpayer's contribution for the taxable year to one or more accounts established: (1) pursuant to the NJBEST Program; or (2) in compliance with subsection (b) of section 529 of the federal Internal Revenue Code of 1986, or a tuition credit or certificate purchased through any such program.
The amount of credit allowed under the bill is equal to 10 percent of the aggregate amount of the taxpayer's contribution for the taxable year which is less than or equal to $5,000, plus five percent of the aggregate amount of the taxpayer's contribution for the taxable year which is greater than $5,000 but less than or equal to $10,000.
For single individuals or for married couples and civil union partners filing jointly, the amount of credit is, in effect, less than or equal to $750 ($500 for the first $5,000 of contributions plus $250 for the second $5,000 of contributions). For married couples or civil union partners filing separately, the credit is one-half the amount allowed for couples and partners filing jointly.
The bill stipulates that unused credit may be applied against future tax liabilities. The amount of any credit that cannot be applied may be carried forward for up to three years following the taxable year for which the credit was allowed.
NJBEST is New Jersey's federal Internal Revenue Code section 529 college savings program. NJBEST and other federally qualified college savings programs are designed to help families set aside funds for future higher-education expenses. They allow taxpayers to make contributions of federally taxed income to accounts established for the beneficiaries' qualified higher education expenses. Account investment earnings are not federally taxed until withdrawn, and if the earnings are applied to qualified higher educational expenses (tuition and fees, books, supplies, and room and board) they are not subject to tax.
The State of New Jersey currently matches the federal tax advantages provided for 529 savings programs. Investment earnings accumulating in a federally qualified tuition program account are excluded from gross income and, upon distribution, amounts used to pay higher education expenses are excluded from taxation.
The tax law changes provided by this bill are intended to serve as an additional financial incentive for participation in the NJBEST and other federally qualified tuition savings programs, and as a means to assist taxpayers in meeting the escalating costs of educating the best and brightest of our current and future generations.
