BILL NUMBER:S1225

TITLE OF BILL:

An act to amend the tax law, in relation to contributions to family
tuition accounts

PURPOSE:

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 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
dollars for a single filer, and from ten to twenty thousand dollars
for married filers filing jointly.

Section 2. Effective date.

JUSTIFICATION:

In the late 1990s 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.

The amounts that individuals can deduct from their taxes for
contributions to these accounts has not changed since the early 2000s.
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:

2014: S7197/A9665 - Investigations & Government Operations/Ways &
Means

FISCAL IMPLICATIONS:

This legislation would double the amount that filers can deduct from
their income taxes for contributions to family tuition accounts.
Currently, this tax expenditure is estimated to cost the state $55


million. It is estimated that enactment of this legislation would
result in an additional cost to the state of $20 million.

EFFECTIVE DATE:

This act shall take effect immediately, and shall apply to the taxable
year in which it takes effect and taxable years commencing on or after
such date.