Bill Text: NJ S2191 | 2018-2019 | Regular Session | Introduced
Bill Title: Provides gross income tax deductions for contributions by certain taxpayers to the New Jersey Better Educational Savings Trust (NJBEST) Program.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2018-03-08 - Introduced in the Senate, Referred to Senate Higher Education Committee [S2191 Detail]
Download: New_Jersey-2018-S2191-Introduced.html
Sponsored by:
Senator ANTHONY R. BUCCO
District 25 (Morris and Somerset)
SYNOPSIS
Provides gross income tax deductions for contributions by certain taxpayers to the New Jersey Better Educational Savings Trust (NJBEST) Program.
CURRENT VERSION OF TEXT
As introduced.
An Act providing gross income tax deductions for contributions by certain taxpayers to the New Jersey Better Educational Savings Trust (NJBEST) Program, supplementing Title 54A of the New Jersey Statutes, and amending P.L.1997, c.237.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. (New section) Except as otherwise provided in this section, a taxpayer shall be allowed a deduction from the taxpayer's gross income for the taxable year in an amount, not to exceed $15,000, equal to the taxpayer's contribution in the taxable year to one or more accounts established pursuant to the "New Jersey Better Educational Savings Trust (NJBEST) Program," N.J.S.18A:71B-35 et seq.; provided, however, that the gross income of the taxpayer for the taxable year does not exceed $250,000 for married individuals filing a joint return and shall not exceed $125,000 for married individuals filing separately or for unmarried individuals.
b. For the second taxable year beginning after enactment of P.L. , c. (C. ) (pending before the Legislature as this bill), and continuing annually thereafter, the director shall annually recompute the maximum allowable deduction and each income limitation set forth in subsection a. of this section by multiplying the maximum allowable deduction and the income limitations by the cost-of-living adjustment. Notwithstanding the maximum allowable deduction and the income limitations provided in subsection a. of this section, each taxpayer shall use the adjusted amounts as computed by the director for the applicable taxable year. The director shall round the recomputed maximum allowable deduction and the income limitation amounts to the next highest multiple of $10.
For purposes of this section, "cost-of-living adjustment" means the factor calculated by dividing the consumer price index for all urban consumers for the nation, as prepared by the United States Department of Labor as of the close of the 12-month period ending on August 31 of the calendar year prior to the calendar year in which the taxable year beings, by that index as of the close of the 12-month period ending on August 31 of the calendar year preceding the calendar year in which P.L. , c. (C. ) (pending before the Legislature as this bill) takes effect.
2. Section 13 of P.L.1997, c.237 (C.54A:6-25) is amended to read as follows:
13. a. Gross income shall not include earnings on a Coverdell education savings account, a qualified State tuition program account, or a qualified ABLE account until the earnings are distributed from the account, at which time [they] the amount of distribution attributable to earnings on the account and the amount of the distribution attributable to contributions allowed as a deduction pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be includible in the gross income of the distributee except as provided in this section.
b. Gross income shall not include qualified distributions as defined in paragraph (3) of subsection c. of this section.
c. For purposes of this section:
(1) "Coverdell education savings account" means a Coverdell education savings account as defined pursuant to paragraph (1) of subsection (b) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.530.
(2) "Qualified State tuition program account" means an account established pursuant to the "New Jersey Better Educational Savings Trust (NJBEST) Program," (N.J.S.18A:71B-35 et seq.) or an account established pursuant to any qualified State tuition program, as defined pursuant to subsection (b) of section 529 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529 or a tuition credit or certificate purchased pursuant to any such program.
(3) "Qualified distribution" means any of the following:
(a) a distribution from a qualified State tuition program account that is used for qualified higher education expenses as defined pursuant to paragraph (3) of subsection (e) of section 529 or a distribution from a qualified ABLE account that is used for qualified disability expenses as defined pursuant to paragraph (5) of subsection (e) of section 529A of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529 or 529A;
(b) a rollover from one account to another account as described in clause (i) of subparagraph (C) of paragraph (3) of subsection (c) of section 529, clause (i) of subparagraph (C) of paragraph (1) of subsection (c) of section 529A, or paragraph (5) of subsection (d) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529, 529A, or 530; or
(c) a change in designated beneficiaries of an account as described in clause (ii) of subparagraph (C) of paragraph (3) of subsection (c) of section 529, clause (ii) of subparagraph (C) of paragraph (1) of subsection (c) of section 529A, or paragraph (6) of subsection (d) of section 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529, 529A, or 530; and
(d) any other transfer involving a qualified ABLE account which is a qualified distribution for the purposes of section 529A of the federal Internal Revenue Code, 26 U.S.C. s.529A.
(4) "Qualified ABLE account" means an account established pursuant to P.L.2015, c.185 (C.52:18A-250 et al.) or an account established pursuant to any qualified State ABLE Program established pursuant to section 529A of the federal Internal Revenue Code of 1986, 26 U.S.C. s.529A.
d. The portion of a distribution from a Coverdell education savings account, a qualified ABLE account, or a qualified State tuition program account that is attributable to earnings and to contributions allowed as a deduction pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be determined in accordance with the principles of section 72 of the federal Internal Revenue Code of 1986, 26 U.S.C. s.72, as applied for purposes of sections 529, 529A, and 530 of the federal Internal Revenue Code of 1986, 26 U.S.C. ss.529, 529A, and 530.
(cf: P.L.2015, c.185, s.1)
3. This act shall take effect immediately and section 1 shall apply to contributions made for taxable years beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill provides certain State taxpayers with a gross income tax deduction, initially up to $15,000 per taxable year, for contributions made by the taxpayer to the NJBEST education savings program.
Specifically, a taxpayer may claim a deduction in the amount of the total contributions made in a taxable year to one or more education saving accounts established under the "New Jersey Better Educational Savings Trust (NJBEST) Program," (N.J.S.18A:71B-35 et seq.), initially up to $15,000 per taxable year. In addition, this deduction may be claimed by taxpayers whose income is, initially, no greater than $250,000 per taxable year, for married individuals filing jointly, and no greater than $125,000 per taxable year, for married individuals filing separately or unmarried individuals.
The bill also provides for annual cost-of-living adjustments to the maximum deduction and to the income limits ("COLA adjustment"); the COLA adjustment amount is the national consumer price index for all urban consumers as prepared by the United States Department of Labor.
This bill affords New Jersey taxpayers with tax relief while promoting personal investment in, and broader access to, education.
