Establishes an income tax deduction for any payments made on student loans

BILL NUMBER:S6487

Title of bill

An act to amend the tax law, in relation to establishing a personal income tax modification reducing federal adjusted gross income for payments of principal and interest on any indebtedness incurred to attend and graduate from any institution of higher education

Purpose

To establish an income tax deduction for any payments made on student loans

Summary of provisions

Section one - amends the tax law by adding by a new paragraph of subsection c by stating the amount of principal and interest paid by a resident taxpayer on any indebtedness incurred for attendance at and graduation from any institution of higher education, as defined in subdivision eight of section two of the education law.

Section two - this act shall take effect immediately and shall apply to payments of principal and interest made during any tax year commencing on or after January 2014, regardless of when the indebtedness was incurred.

Justification

As the cost of higher education increases, so does the accruing amount of debt, not only for the graduating student but also for older generations that are co-signers on the loans. The tax deduction would assist both the students and past generations by helping make the student loans payments less unbearable and lessen the stress that is incurring on New York State's economy.

The high monthly loan payments are having a negative effect on the economy of the state. Instead of New Yorkers having money going towards the purchasing of a house, a new mortgage or purchasing other consumer products their money is going toward paying off student loans. A state wide tax deduction for both public and private institutions would greatly help with managing the high monthly payments and allow for increased consumer spending that would benefit the economy.

Legislative history

New legislation.

Fiscal implications

To be determined

Effective date

This act shall take effect immediately and shall apply to payments of principal and interest made during any tax year commencing on or after January 2014, regardless of when the indebtedness was incurred.