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Legislative Year: 2021 Change
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Bill Detail: HB21-1192

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Title 529 Plan Education Loan Payment Eligible Distribution
Status House Committee on Education Postpone Indefinitely (04/07/2021)
Bill Subjects
  • Fiscal Policy & Taxes
  • Higher Education
House Sponsors J. Arndt (D)
Senate Sponsors
House Committee Education
Senate Committee
Date Introduced 03/04/2021
Summary

Under federal law, money deposited in a qualified tuition program
under section 529 of the internal revenue code (529 plan) grows tax
deferred and is withdrawn tax free when used for eligible expenses. In

addition to the federal tax benefit, the state provides an incentive for the
deposit of money into a 529 plan by offering a state income tax deduction
for contributions to such 529 plans.
In 2019, the federal government included paying principle or
interest on any qualified education loan, up to $10,000 per year, as an
eligible expense.
Current law requires the state income tax deduction to be
recaptured from the taxpayer if a distribution is not used for listed
purposes. The bill specifies that using a 529 plan for paying principle or
interest on any qualified education loan, not to exceed $10,000, is also an
eligible distribution for purposes of the state income tax deduction for
contributions to such 529 plans.
The bill also requires collegeinvest to provide the department of
revenue with a secure electronic report containing information for the 529
plan owners and third-party contributors necessary for the administration
of the income tax deduction.

Committee Reports
with Amendments
Full Text
Full Text of Bill (pdf) (most recent)
Fiscal Notes Fiscal Notes (04/05/2021) (most recent)  
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