NY State Senate Bill 2023-S510

Senate Bill S510

2023-2024 Legislative Session

Relates to a tax credit for employers who contribute to a college choice tuition savings account on behalf of an employee

download bill text pdf

Current Bill Status - In Senate Committee Budget And Revenue Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to budget and revenue
Jan 04, 2023	referred to budget and revenue

co-Sponsors

2023-S510 (ACTIVE) - Details

See Assembly Version of this Bill:: A2465
Current Committee:: Senate Budget And Revenue
Law Section:: Tax Law
Laws Affected:: Amd §§210-B, 606 & 1511, Tax L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S5067, A8243
2021-2022: S96, A3348

2023-S510 (ACTIVE) - Summary

Creates a tax credit for employers who contribute to a college choice tuition savings account on behalf of an employee.

2023-S510 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S510

SPONSOR: THOMAS
 
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.

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 subdivision 54 states the amount of credit, which
shall be equal to the taxpayer's payments on behalf of an employee to a
family tuition account established 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 credit,
which cannot reduce the 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 credited 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 as immediate and will
apply to taxable years beginning on or after the first day of 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.

Many New Yorkers do not have savings set aside for their children's
education. Many young New Yorkers recognize that that they must earn a
bachelor's degree to achieve their professional aspirations. Put togeth-
er, 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 York-
ers. The Rockefeller Institute 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 significantly higher. Student debt hampers the
futures of college graduates, as it often delays family planning,
homeownership, 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 it due to debt prospects. More-
over, the student debt crisis is holding New York back from achieving
its full potential and affects all New Yorkers. When people have higher
debt, they are less likely to purchase consumer products, thereby
decreasing economic activity. 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 a state's workforce becomes more
productive, it allows that state to attract more businesses, which caus-
es average incomes to rise.

By promoting college savings, this bill will enable parents to finan-
cially 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:

2021-22: S.96 (Thomas) / A.3348 (Epstein) - Referred to Budget and
Revenue.

2019-20: S.5067 (Thomas) / A.8243 (Epstein) - Referred to Budget and
Revenue.

 
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.

2023-S510 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    510
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              January 4, 2023
                                ___________
 
 Introduced  by  Sen.  THOMAS -- read twice and ordered printed, and when
   printed to be committed to the Committee on Budget and Revenue
 
 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  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  210-B  of the tax law is amended by adding a new
 subdivision 59 to read as follows:
   59. 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 FOUR-
 TEEN-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
 EIGHTY-SIX  OF  THIS  CHAPTER.  PROVIDED,  HOWEVER,  THE  PROVISIONS  OF
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD01647-01-3
 S. 510                              2

 
 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 (xlx) to read as
 follows:
 (XLX) EMPLOYER COLLEGE               AMOUNT OF CREDIT
 CHOICE TUITION SAVINGS               UNDER SUBDIVISION
 CONTRIBUTION CREDIT UNDER            FIFTY-NINE OF SECTION
 SUBSECTION (OOO)                     TWO HUNDRED TEN-B
   § 3. Section 606 of the tax law is amended by adding a new  subsection
 (ooo) to read as follows:
   (OOO)  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 CONTRIB-
 UTION, 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  subdivi-
 sion (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 TWO 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 FOUR-
 TEEN-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
 PROVISIONS OF SECTION ONE THOUSAND EIGHTY-SIX OF THIS CHAPTER. PROVIDED,
 S. 510                              3
 
 HOWEVER, THE PROVISIONS OF SUBSECTION (C) OF SECTION ONE THOUSAND EIGHT-
 Y-EIGHT OF THIS CHAPTER NOTWITHSTANDING, NO INTEREST SHALL BE PAID THER-
 EON.
   (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.

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Senate Bill S510

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Sponsored By

Kevin Thomas