Bill Text: NJ S2791 | 2016-2017 | Regular Session | Introduced
Bill Title: Allows gross income tax deductions for certain contributions to NJBEST college tuition savings program.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2016-11-14 - Introduced in the Senate, Referred to Senate Higher Education Committee [S2791 Detail]
Download: New_Jersey-2016-S2791-Introduced.html
Sponsored by:
Senator LINDA R. GREENSTEIN
District 14 (Mercer and Middlesex)
SYNOPSIS
Allows gross income tax deductions for certain contributions to NJBEST college tuition savings program.
CURRENT VERSION OF TEXT
As introduced.
An Act allowing gross income tax deductions for certain contributions to the New Jersey Better Educational Savings Trust (NJBEST) Program, supplementing Title 54A 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 shall be allowed a deduction from the taxpayer's gross income for the taxable year, not to exceed $2,000, $1,000 for a married person filing separately, for each beneficiary for whom contributions are made for the taxable year to an account established pursuant to the "New Jersey Better Educational Savings Trust (NJBEST) Program," N.J.S.18A:71B-35 et seq.
2. 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 a Coverdell education savings account, a qualified [State] tuition program account, or a qualified ABLE 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) "Coverdell education savings account" means a Coverdell education 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 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 or a distribution from a qualified ABLE account that is used for qualified disability expenses as defined pursuant to paragraph (5) of subsection (e) of section 529A of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529 or 529A;
(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, clause (i) of subparagraph (C) of paragraph (1) of subsection (c) of section 529A, or paragraph (5) of subsection (d) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529, 529A, or 530; or
(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, clause (ii) of subparagraph (C) of paragraph (1) of subsection (c) of section 529A, or paragraph (6) of subsection (d) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529, 529A, or 530; and
(d) any other transfer involving a qualified ABLE account which is a qualified distribution for the purposes of section 529A of the federal Internal Revenue Code, 26 U.S.C. s.529A.
(4) "Qualified ABLE account" means an account established pursuant to P.L.2015, c.185 (C.52:18A-250 et al.) or an account established pursuant to any qualified State ABLE Program established pursuant to section 529A of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529A.
d. The portion of a distribution from a Coverdell education savings account, a qualified ABLE account, or a qualified [State] tuition program account that is attributable to earnings 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, 529A, and 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. ss.529, 529A, and 530.
(cf: P.L.2015, c.185, s.1)
3. This act shall take effect immediately and apply to taxable years beginning on or after January 1, 2017.
STATEMENT
This bill allows a taxpayer to deduct amounts of the taxpayer's contribution to accounts created under the New Jersey Better Educational Savings Trust (NJBEST) Program, New Jersey's federally qualified tuition program, from the taxpayer's gross income. The bill allows a taxpayer to deduct up to $2,000 per taxable year for each beneficiary ($1,000 per beneficiary for a married taxpayer filing separately) for whom the taxpayer makes contributions. This deduction will serve as an incentive for participation in the NJBEST Program and participation will help taxpayers meet the ever-increasing costs of higher education.
A number of states currently offer special state tax benefits for the state's own federally-qualified tuition program.
