What's happening
This bill creates a tax credit for New York employers who contribute to employees' college tuition savings accounts, capped at $5,000 per employee.
Why it matters
Encourages employer involvement in higher education savings. By offering a tax credit, the bill incentivizes employers to help their employees save for college, potentially making higher education more accessible for workers and their families.
Targets support for NY’s 529 college savings plans. The credit specifically applies to contributions made to “family tuition accounts” under New York’s 529 plan, which can provide tax-advantaged growth and usage for education expenses, strengthening a state-preferred savings vehicle.
Direct financial benefit to both employers and employees. Employers can reduce their state tax liability (and potentially attract or retain talent), while employees can receive additional contributions to their college savings, making this a mutual benefit structure.
Includes safeguards and recapture provisions. The bill stipulates that credits above tax due are treated as overpayments (refundable, but without interest) and references mechanisms to recapture credits if conditions are not met, aiming to prevent abuse and ensure compliance.
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Tax Credit for College Savings
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to budget and revenue
- Print number 5067a
- Amend and recommit to budget and revenue
- Referred to budget and revenue
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.
Tax Credit for College Savings
In Assembly Committee · Ways And Means · Sponsor Harvey Epstein
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5067--A
2019-2020 Regular Sessions
IN SENATE
April 5, 2019
Introduced by Sen. THOMAS -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue -committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the tax law, in relation to creating a tax credit for employers who contribute to a college choice tuition savings account on behalf of an employee
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 210-B of the tax law is amended by adding a new subdivision 54 to read as follows:
54. Employer college choice tuition savings contribution credit. (a) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in paragraph (b) of this subdivision, against the tax imposed by this article, if it provides a contribution, on behalf of an employee, to a family tuition account established under article fourteen-A of the education law by such employee.
(b) Amount of credit. The credit allowed pursuant to paragraph (a) of this subdivision shall be in an amount equal to the taxpayer's payment, on behalf of an employee, to a family tuition account established under article fourteen-A of the education law by such employee. Provided, however, that no such credit allowed under this subdivision shall exceed five thousand dollars per employee.
(c) Application of credit. The credit allowed under this subdivision for any taxable year shall not reduce the tax due for such year to less than the amount prescribed in paragraph (d) of subdivision one of section two hundred ten of this article. If, however, the amount of credits allowed under this subdivision for any taxable year reduces the tax to such amount, any amount of credit thus not deductible in such taxable year shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section one thousand
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10997-04-9
S. 5067--A 2
eighty-six of this chapter. Provided, however, the provisions of subsection (c) of section one thousand eighty-eight of this chapter notwithstanding, no interest shall be paid thereon.
(d) Credit recapture. For provisions requiring recapture of credit, see section forty-four of this chapter.
§ 2. Subparagraph (B) of paragraph 1 of subsection (i) of section 606 of the tax law is amended by adding a new clause (xlv) to read as follows: (xlv) Employer college Amount of credit choice tuition savings under subdivision contribution credit under fifty-four of section subsection (kkk) two hundred ten-B
§ 3. Section 606 of the tax law is amended by adding a new subsection (kkk) to read as follows:
(kkk) Employer college choice tuition savings contribution credit. (1) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in paragraph two of this subsection, against the tax imposed by this article, if it provides for a contribution, on behalf of an employee, to a family tuition account established under article fourteen-A of the education law by such employee.
(2) Amount of credit. The credit allowed pursuant to paragraph one of this subsection shall be in an amount equal to the taxpayer's contribution, on behalf of an employee, to a family tuition account established under article fourteen-A of the education law by such employee. Provided, however, that no such credit allowed under this subsection shall exceed five thousand dollars per employee.
(3) Application of credit. If the amount of the credit allowed under this subsection for any taxable year shall exceed the taxpayer's tax for such year, the excess shall be treated as an overpayment of tax to be credited or refunded in accordance with the provisions of section six hundred eighty-six of this article, provided, however, that no interest shall be paid thereon.
(4) Credit recapture. For provisions requiring recapture of credit, see section forty-four of this chapter.
§ 4. Section 1511 of the tax law is amended by adding a new subdivision (ee) to read as follows:
(ee) Employer college choice tuition savings contribution credit. (1) Allowance of credit. A taxpayer shall be allowed a credit, to be computed as provided in paragraph (2) of this subdivision, against the tax imposed by this article, if it provides a contribution, on behalf of an employee, to a family tuition account established under article fourteen-A of the education law by such employee.
(2) Amount of credit. The credit allowed pursuant to paragraph one of this subdivision shall be in an amount equal to the taxpayer's payment, on behalf of an employee, to a family tuition account established under article fourteen-A of the education law by such employee. Provided, however, that no such credit allowed under this subdivision shall exceed five thousand dollars per employee.
(3) Application of credit. The credit allowed under this subdivision shall not reduce the tax due for such year to be less than the minimum fixed by paragraph four of subdivision (a) of section fifteen hundred two or section fifteen hundred two-a of this article, whichever is applicable. However, if the amount of the credit allowed under this subdivision for any taxable year reduces the taxpayer's tax to such amount, any amount of credit thus not deductible will be treated as an overpayment of tax to be credited or refunded in accordance with the
S. 5067--A 3
provisions of section one thousand eighty-six of this chapter. Provided, however, the provisions of subsection (c) of one thousand eighty-eight of this chapter notwithstanding, no interest shall be paid thereon.
(4) Credit recapture. For provisions requiring recapture of credit, see section forty-four of this chapter.
§ 5. This act shall take effect immediately and shall apply to taxable years beginning on and after the first of January next succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to creating a tax credit for employers who contribute to a college choice tuition savings account on behalf of an employee
Purpose or general idea of bill
The purpose of the bill is to increase New Yorkers' college savings for their children by incentivizing employers to contribute to employees' family tuition saving accounts, otherwise known as college choice tuition savings accounts, or 529 plans.
Summary of provisions
Section 1 of the bill amends section 210-B of the tax law by adding subdivision 54.
Read the full memo (1,011 words)
- Subparagraph (a) of subdivision 54 states that taxpayers are allowed a credit against their New York State corporate income taxes if they contribute to an employee's family tuition account as established under article fourteen-A of the education law. Subparagraph (b) of subdivi- sion 54 states the amount of credit, which shall be equal to the taxpay- ers payments on behalf of an employee to a family tuition account estab- lished under article fourteen-A of the education law, provided it does not exceed five thousand dollars.
- Subparagraph (c) of subdivision 54 states the application of the cred- it, which cannot reduce tax due to less than the fixed dollar minimum tax as prescribed by subparagraph (d) of subdivision one of section two hundred ten of this article. If the credit exceeds tax liability for a given year, that excess payment will be credit to the taxpayer.
- Subparagraph (d) of subdivision 54 states credit recapture, which for provisions requiring recapture of credit, section forty-four of this chapter applies.
Section 2 of the bill amends subparagraph (b) of paragraph 1 of subsection (i) of section 606 of the tax law by adding a new clause, xlv. This new clause adds the college choice tuition savings credit to the list of investment tax credits against the personal income tax derived from a taxpayer's income that results from holding shares in a corporation.
Section 3 of the bill amends section 606 of the tax law by adding a new subsection, (kkk). This subsection repeats the information stated in section 210-B subdivision 54, stating the allowance, amount, application and recapture of the tax credit in subdivisions 1-4. This section provides a layout of the rules associated with the new credit created in section 2 of the bill.
Section 4 of the bill amends Section 1511 of the tax law and adds a new subdivision, (ee). This section applies the tax credit for an employer contributing to an employee's family tuition account as established under article fourteen-A of the education law to the corporate income
tax on insurance companies. This section states the allowance, amount, application and recapture of the credit in subdivisions 1-4.
Section 5 of the bill provides the effective date, which is immediately, and applies to taxable years beginning on or after the first day of the January following the date on which this bill becomes a law.
Justification
The cost of attending college is significant. According to the National Conference of State Legislatures, in 2016, the net price to attend a four-year public university full time for one year following the subtraction of financial aid was $14,120, while the median amount invested in a 529 plan in 2016 was $14,700. Even if students attended local community, state or city colleges, which is not always logis- tically possible, the average 529 holder would still be unable to pay for their child's 4-year degree. What's more, according to the Pew Char- itable Trusts, there were 13 million 529 accounts in the US in 2017, while according to the US Census Bureau, there were 79.2 million four- person family households in the country. Clearly, many New Yorkers do not have savings set aside for their children's education. Many young New Yorkers recognize that in order to achieve their professional aspi- rations, they must earn a bachelor's degree. Put together, this means that many New Yorkers must choose either to not attend college or to take on debt.
Many New Yorkers have chosen the latter. Over $90 billion is owed in student debt by almost 2.3 million New Yorkers. The Rockefeller Insti- tute of Government indicates that in 2018 58% of college students in New York graduated with debt, with the average amount of that debt being $30,346. For African Americans and Latinos, the average debt is signif- icantly higher. Student debt hampers the futures of college graduates, as it often delays family planning, home ownership, and other major investments. This debt crisis has also pushed swaths of New Yorkers away from higher education, or forced them to delay or end their education due to debt prospects.
This crisis affects all New Yorkers. When people have higher debt, they are less likely to purchase consumer products, thereby decreasing economic activity. And, according to a 2013 study conducted by the Economic Policy Institute, the most successful way to increase growth in a state is to invest in education, as the state's workforce becomes more productive, thus allowing the state to attract more businesses, which causes average incomes to rise. Moreover, the student debt crisis is holding New York back from achieving its full potential. By promoting college saving, this bill will enable parents to financially support their children's higher education, decrease student debt, and foster New York as a prime location for businesses, families, and individuals to thrive.
Prior legislative history
New legislation.
Fiscal implications for state and local governments
Assuming that approximately 25-30 percent of employers claim the credit, net tax receipts will decrease by approximately $15 million annually (the average amount between 25% and 30% participation rate).The loss of revenue to the State in State Fiscal Year 2020 is $3 million. Once it is fully annualized, the loss of revenue to the State is approximately $15 million per year.
Effective date
This act shall take effect immediately and shall apply to taxable years beginning on and after the first of January next succeeding the date on which this bill shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.