TRENTON - A bill sponsored by Senate Commerce Committee Chairwoman Nellie Pou that would assist parents saving for their children's college tuition through a gross income tax deduction passed the Senate Higher Education Committee today.
"This bill will give parents another incentive to save for their children's higher education," said Senator Pou (D-Passaic/Bergen) "In a high-tax state like New Jersey, allowing taxpayers to set aside a portion of their gross income tax-free for higher education is very important. The New Jersey Better Educational Savings Trust exists for this very purpose. This bill is a sound investment in our children's education."
The bill, S-1604, would allow a taxpayer to deduct up to $5,000 per year or $2,500 per year for a married taxpayer filing separately for contributions into the New Jersey Better Educational Savings Trust. Currently, investments grow without being federally taxed and withdrawals for qualified higher expenses also are not federally taxed. Contributions are not tax deductible.
Out of the 43 states with a state income tax, 34 allow for full or partial state income tax deductions on contributions to their state college savings plans.
The bill passed out of committee by a vote of 4-0 and advances to the Senate Budget and Appropriation Committee for further consideration