BILL NUMBER:S6697

TITLE OF BILL:  An act to amend the tax law, in relation to increasing
the college tuition personal income tax credit and contributions to
family tuition accounts

PURPOSE:  To increase the amount of tuition expenses that can be
claimed for the tuition tax credit and to increase the amount that a
family can deduct from their income taxes for contributions to the
college choice tuition savings accounts.

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 to twenty
thousand.

Section 2 amends paragraph 32 of subsection (c) of section 612 of the
tax law to double the exclusion a single payer can claim for
contributions to a family tuition account from five to ten thousand
for a single filer and from ten to twenty thousand for married filers
filing jointly.

Section 3 sets an immediate 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.

In the late 90's New York created the New York State College Choice
Tuition Savings Program, also known as the 529 College Savings
Program. Families can set up 529 accounts for their children and
contributions into these accounts can be later used to pay for any
qualifying educational expenses, be it tuition, fees, textbooks, and
certain room and board costs. New York's 529 College Savings Program
has proven quite popular. According to market reports New York's
College Savings Program is the second largest in the country, with


over 764,000 account open totaling over $14.23 billion in funds
invested in the program. As with the tuition tax credit, the amounts
that individuals can deduct from their taxes for contributions to
these accounts has not changed since the early 2000's. As the College
Board report shows, the increase in the costs of tuition plus
additional expenses has been significant. The average total costs at
four-year private nonprofit institutions have increased by 25% from
the 2002-03 academic year to the 2012-13 academic year and at public
four-year institutions the increase has been an incredible 45% in the
same time. The amount individuals can contribute to these accounts tax
free needs to keep up with the massive inflation in college costs that
we have seen in the last decade.

LEGISLATIVE HISTORY: This is a new bill

FISCAL IMPLICATIONS:  This legislation would double the amount
individuals can claim as eligible tuition expenses for the tuition tax
credit and the amount that filers can deduct from their income taxes
for contributions to family tuition accounts. Currently these two tax
expenditures are estimated to cost the State $305 million, with $250
million for the tuition tax credit and $55 million for deductions for
contributions to family tuition accounts. The most conservative
estimate is that this legislation would double those costs, and thus
would cost the state an additional $305 million in lost tax revenue
annually.

EFFECTIVE DATE:  This act shall take effect immediately and apply for
the tax year beginning on January 1, 2014.