Bill Text: NJ A217 | 2016-2017 | Regular Session | Introduced
Bill Title: Allows gross income tax deductions for contributions by certain taxpayers to New Jersey Better Educational Savings Trust (NJBEST) Program and provides a State match for contributions to NJBEST accounts for families meeting certain income guidelines.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2016-01-27 - Introduced, Referred to Assembly Higher Education Committee [A217 Detail]
Download: New_Jersey-2016-A217-Introduced.html
STATE OF NEW JERSEY
217th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2016 SESSION
Sponsored by:
Assemblyman WAYNE P. DEANGELO
District 14 (Mercer and Middlesex)
Assemblyman DANIEL R. BENSON
District 14 (Mercer and Middlesex)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
SYNOPSIS
Allows gross income tax deductions for contributions by certain taxpayers to New Jersey Better Educational Savings Trust (NJBEST) Program and provides a State match for contributions to NJBEST accounts for families meeting certain income guidelines.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning the New Jersey Better Educational Savings Trust (NJBEST) Program, supplementing Title 54A and Title 18A of the New Jersey Statutes, and amending P.L.1997, c.237.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) A taxpayer with a gross income for the taxable year of not more than $500,000 shall be allowed a deduction from the taxpayer's gross income for the taxable year in the amount of the taxpayer's contribution for the taxable year to one or more accounts established pursuant to the "New Jersey Better Educational Savings Trust (NJBEST) Program," N.J.S.18A:71B-35 et seq.; provided however, that the deduction allowed for a taxable year shall not exceed $10,000 for a taxable year for married couples filing a joint return for federal tax purposes and shall not exceed $5,000 for a taxable year for married individuals filing separately or for unmarried individuals.
2. (New section) a. The Higher Education Student Assistance Authority shall establish and implement the Aspiring Scholars Matching Grant Program. Under the program, a State matching grant shall be provided in an amount equal to the contributions made into accounts for a designated beneficiary. A designated beneficiary shall receive a matching grant of no more than $500 per calendar year, for up to a maximum of five years. A matching grant shall be used for the qualified higher education expenses of the designated beneficiary.
b. In addition to such other criteria as deemed appropriate by the authority, in order to qualify for a matching grant the following criteria shall be met:
(1) the contributor, if an individual, and the designated beneficiary shall be New Jersey residents; and
(2) the annual family income of the designated beneficiary in the year prior to applying for a matching grant shall not exceed $70,000.
c. The authority shall promulgate regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the provisions of this section.
3. Section 13 of P.L.1997, c.237 (C.54A:6-25) is amended to read as follows:
13. a. Gross income shall not include earnings on an education [individual retirement] savings account or a qualified [State] tuition program account until the earnings are distributed from the account, at which time [they] the amount of the distribution attributable to earnings on the account and the amount of the distribution attributable to contributions allowed as a deduction pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be includible in the gross income of the distributee except as provided in this section.
b. Gross income shall not include qualified distributions as defined in paragraph (3) of subsection c. of this section.
c. For purposes of this section:
(1) "Education [individual retirement] savings account" means an education [retirement] savings account as defined pursuant to paragraph (1) of subsection (b) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.530.
(2) "[Qualified State tuition] Tuition program account" means an account established pursuant to the "New Jersey Better Educational Savings Trust (NJBEST) Program," (N.J.S.18A:71B-35 et seq.) or an account established pursuant to any [qualified State] tuition program [, as defined pursuant to] established 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.
(3) "Qualified distribution" means any of the following:
(a) a distribution from a [qualified State] tuition program account that is used for qualified higher education expenses as defined pursuant to paragraph (3) of subsection (e) of section 529 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529;
(b) a rollover from one account to another account as described in clause (i) of subparagraph (C) of paragraph (3) of subsection (c) of section 529, if applicable, or paragraph (5) of subsection (d) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529 or 530;
(c) a change in designated beneficiaries of an account as described in clause (ii) of subparagraph (C) of paragraph (3) of subsection (c) of section 529 or paragraph (6) of subsection (d) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529 or 530;
d. The portion of a distribution from an education [individual retirement] savings account or a [qualified State] tuition program account that is attributable to earnings and to contributions allowed as a deduction pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be determined in accordance with the principles of section 72 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.72, as applied for purposes of sections 529 and 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. ss.529 and 530.
(cf: P.L.2001, c.262, s.21)
4. This act shall take effect immediately, and section 1 shall apply to contributions made or costs incurred for taxable years beginning after the date of enactment.
STATEMENT
This bill allows a gross income tax deduction for amounts contributed to the New Jersey Better Educational Savings Trust (NJBEST) Program for taxpayers with gross incomes of not more than $500,000. The bill allows 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.
The bill also requires the New Jersey Higher Education Student Assistance Authority, which administers NJBEST, to establish and implement the Aspiring Scholars Matching Grant Program. Under the program a matching grant will be provided by the State for the qualified higher education expenses of a designated beneficiary. The amount of the matching grant will equal the amount of contributions made into an account for a designated beneficiary, up to the limit of $500 per calendar year for up to a maximum of five years. To be eligible for a matching grant the following criteria must be met:
(1) the contributor, if an individual, and the designated beneficiary must be New Jersey residents; and
(2) the annual family income of the designated beneficiary in the year prior to applying for a matching grant may not exceed $70,000.
NJBEST is New Jersey's federal Internal Revenue Code Section 529 qualified college savings program. Federal tax law allows 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 used for qualified higher educational expenses they are never taxed. Currently, New Jersey matches those federal tax advantages. 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.
