What's happening
This bill allows certain New York taxpayers to deduct up to $2,500 in student loan interest from their state income tax.
Why it matters
Targets Middle- and Upper-Middle-Income Earners. The deduction is specifically for taxpayers with federal adjusted gross incomes between $65,000-$125,000 (single/head of household) and $130,000-$250,000 (married filing jointly), filling a gap for those who often do not qualify for federal student loan interest deductions due to income limits.
Addresses the "Deduction Phase-Out" Problem. Many in these income brackets are ineligible for the federal deduction for student loan interest because their incomes are too high; this bill offers state tax relief where federal relief ends.
Potentially Reduces State Tax Burden Substantially. Allowing up to $2,500 in student loan interest deductions could lower taxable income, leading to noticeable state tax savings at a time when student debt can be a significant financial strain, especially for families with higher incomes but also higher living or education costs.
May Incentivize Talent Retention and Economic Participation. By making New York more financially attractive to college-educated professionals with student loan debt, the bill could help retain skilled workers in the state, supporting both the tax base and the broader economy.
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Who cares
Single and head-of-household student loan borrowers
Those in the specified income bands from $65,000 to $125,000 could subtract up to $2,500 in student loan interest from income for state tax purposes, with adjustments for interest already deducted federally in the lower band.
Married student loan borrowers filing jointly
Those in the specified income bands from $130,000 to $250,000 could receive a similar subtraction of up to $2,500, with adjustments for federal deductions in the lower band.
Tax preparers and accountants
They would need to apply the bill’s income thresholds, filing-status rules and federal deduction adjustments when calculating eligible clients’ New York taxable income.
Headline styles
Deduct Student Loan Interest
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to ways and means
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Deduct Student Loan Interest
In Senate Committee · Investigations And Government Operations · Sponsor Jeffrey D. Klein
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
10024
IN ASSEMBLY
March 7, 2018
Introduced by M. of A. FAHY -- read once and referred to the Committee on Ways and Means
AN ACT to amend the tax law, in relation to establishing a reduction of certain taxpayer's federal adjusted gross income, for state personal income tax purposes, for student loan interest payments made by the taxpayer
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 44 to read as follows:
(44)(A) (i) For a taxpayer who files singly or as the head of a household with a federal adjusted income, without the deduction of any interest paid on student loans, of not less than sixty-five thousand dollars nor more than eighty thousand dollars, the difference between the interest paid on student loans by the taxpayer, is an amount not to exceed two thousand five hundred dollars, and the amount of such interest deducted by such taxpayer to calculate his or her federal adjusted gross income; and
(ii) For a taxpayer who files singly or as the head of a household with a federal adjusted gross income of not less than eighty thousand dollars, nor more than one hundred twenty-five thousand dollars, interest, in an amount not to exceed two thousand five hundred dollars, paid on indebtedness incurred from a student loan; and
(iii) For married taxpayers filing jointly with a federal adjusted gross income, without the deduction of any interest paid on student loans, of not less than one hundred thirty thousand dollars, nor more than one hundred sixty thousand dollars, the difference between the interest paid on student loans by the taxpayers, is an amount not to exceed two thousand five hundred dollars, and the amount of such interest deducted by such taxpayers to calculate their federal adjusted gross income; and
(iv) For married taxpayers filing jointly with a federal adjusted gross income of not less than one hundred sixty thousand dollars, nor more than two hundred fifty thousand dollars, interest, in an amount not
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD14122-05-8
A. 10024 2
to exceed two thousand five hundred dollars, paid on indebtedness incurred from a student loan.
(B) For the purposes of this paragraph, "student loan" shall have the same meaning as ascribed to such term by subparagraph (B) of paragraph forty-two of this subsection, as added by chapter four hundred fifty-six of the laws of two thousand seventeen.
§ 2. This act shall take effect immediately, and shall apply to the taxable year in which it shall take effect and to all subsequent taxable years.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.