Provides tax credit for allowable college expenses

Title of bill

An act to amend the tax law, in relation to providing a tax credit for allowable college expenses

Purpose

To establish the "Stay in New York Tax Credit".

Summary of provisions

Section 1. Amends section 606 of the tax law to add a new section (ccc) to establish the stay in New York Tax Credit. The amount of the credit would be equal to 25% of allowable college expenses, capped at $3000. Additionally, this section establishes the criteria required to qualify for the credit.

Section 2. Amends the subparagraph (A) of paragraph 2 of subsection (t) of section 606 of the tax law to define the term allowable college tuition expenses.

Section 3. Amends paragraph 4 of subsection (t) of section 606 of the tax law to improve New York's current tax credit.

Section 4. Amends subsection (t) of section 606 of the tax law to add a new section 4-a to create an inflation adjustment for the credit.

Section 5. Sets forth the effective date.

Justification

This bill amends the tax law to create the Stay in New York Tax Credit in order to retain graduates from New York colleges and universities. The credit would allow college graduates to receive a credit equal to their college expenses over four years. This credit would be capped at $3000 per year and would apply to those graduates who live and work in New York subsequent to graduation and who complete community service while they are attending college.

Additionally, this bill improves New York's current tax credit by doubling the amount of qualified college expenses that can be claimed from $10,000 to $20,000 over five years and would double the amount of the credit allowed from $400 to $800 during that same time period.

Furthermore, this bill would index the qualified tuition expenses and the credit to the rate of inflation of the Higher Education Price Index.

With the cost of higher education increasing and the amount of student loan debt accumulated prior to graduation growing at an alarming rate, this bill would ease the burden of repayment by creating a new tax credit and improving the already existing program in order to offset the costs of college. Additionally, this bill encourages students to complete community service while in college and to remain in New York State upon graduation.

Legislative history

2013-14 S.4576A; 2012 was included as part A of the college affordability package, S.7449A

Fiscal implications

$212 million by 2016. EFFECTIVE DATE : This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2016; provided, however, that section one of this act shall apply to years beginning on or after January 1, 2019.