Increases the personal income tax credit for college tuition expenses

4 Co-sponsors

• Jeffrey D. Klein
• Tony Avella
• Diane J. Savino
• David J. Valesky

BILL NUMBER:S1222

Title of bill

An act to amend the tax law, in relation to increasing the college tuition personal income tax credit

Purpose

To increase the amount of tuition expenses that can be claimed for the tuition tax credit.

Summary of provisions

Section 1. Amends subparagraph (A) of paragraph 2 of subsection (t) of section 606 of the tax law to double the amount that can be claimed as an allowable college tuition expense from ten thousand dollars to twenty thousand dollars.

Section 2. Effective date.

Justification

New York State currently helps lessen the burden on families coping with paying for college by offering the option of a credit or deduction for college tuition expenses they incur during a tax year. A participating New York taxpayer can claim this credit or deduction on tuition expenses they paid for themselves, a spouse or a dependent. The credit or deduction can be claimed on expenses paid to any accredited college or university, whether it be in New York or outside of New York, and regardless of whether it is public or private. Families in New York get a choice of applying for a credit, which is money they get back after their tax liability is calculated, or claiming a deduction, which lowers their taxable income, depending on which solution they find most helpful.

The amount of tuition expenses that can be claimed for this credit has not been changed since 2001, when this credit was created. According to a report by the College Board, the average cost of tuition at a private nonprofit four-year institution was $29,056 for the 2012-13 academic year, a 26% increase from the 2002-03 academic year. In the same time the average tuition for public four-year institutions has climbed by 40% according to this same study. The current credit amount needs to increase to keep up with this massive inflation in college costs.

Legislative history

2014: S6697-A/A9664 - Investigations & Government Operations/Ways & Means

Fiscal implications

This legislation would double the amount individuals can claim as eligible tuition expenses for the tuition tax credit. Currently, this tax expenditure is estimated to cost the state $250 million. The most conservative estimate is that this legislation would double this cost,

and thus would cost the state an additional $250 million in lost tax revenue annually.

Effective date

This act shall take effect immediately, and shall apply to the taxable year in which it takes effect and taxable years commencing on or after such date.