Panel OK’s Scalera/Mckeon/Greenwald Bill For Tax-Deductible Contributions To College Fund

Measure Would Exempt First $5,000 in Annual Contributions To NJ BEST College Savings Plan from State Income Taxes

(TRENTON)-An Assembly panel has released legislation Assemblymen Fred Scalera, John McKeon and Louis Greenwald sponsored to provide a state income tax deduction to residents who save for their children’s higher education through a state-administered college savings plan.

“Money being saved to pay for a child’s college education should be safeguarded, not taxed,” said Scalera (D-Essex/Bergen/Passaic). “This tax deduction will provide families with an incentive to plan for meeting the mounting costs of higher education.”

“Saving for a college education is more important today than it ever has been,” said McKeon (D-Essex). “We need to reward parents who have the foresight to put aside money now for their children’s higher educations.”

The Scalera/McKeon/Greenwald bill (A-912) would provide a state gross income tax deduction for the first $5,000 contributed annually to the New Jersey Better Educational Savings Trust (NJ BEST) program. NJ BEST is a 529 college savings plan administered through the New Jersey Higher Education Student Assistance Authority and managed by Franklin Templeton Investments.

“The state’s current tax code has actually penalized parents who took advantage of the state’s 529 savings plans to set aside money for a child’s college education,” said Greenwald (D-Camden). “Money being put into NJ BEST should be just as tax-free as the money that eventually comes out to pay tuition bills.”

The Assembly Appropriations Committee released the measure 12-0. It now goes to the Assembly Speaker, who decides if and when to post it for a floor vote.

For Release: February 10, 2009
Contact: Assemblyman Scalera, 973-667-4431
Assemblyman McKeon, 973-275-1113
Brian McGinnis, 856-435-1247