Bill Text: HI SB281 | 2024 | Regular Session | Amended
Bill Title: Relating To The College Savings Program.
Spectrum: Partisan Bill (Democrat 13-0)
Status: (Engrossed - Dead) 2024-03-25 - Received notice of discharge of all conferees (Hse. Com. No. 457). [SB281 Detail]
Download: Hawaii-2024-SB281-Amended.html
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THE SENATE |
S.B. NO. |
281 |
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THIRTY-SECOND LEGISLATURE, 2023 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 1 |
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A BILL FOR AN ACT
RELATING TO THE COLLEGE SAVINGS PROGRAM.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
The legislature further finds that most other states offer a state tax deduction or credit for contributions to state college savings programs as an incentive for their residents to participate. The legislature therefore finds that, as the cost of higher education continues to rise, it is appropriate for the State to provide a similar incentive to Hawaii taxpayers to participate in college savings programs, thus helping Hawaii families save for college instead of taking out educational loans.
The purpose of this Act is to provide a state income tax deduction for Hawaii taxpayers making contributions to a college savings program established under chapter 256 of the Hawaii Revised Statutes.
SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§235- Hawaii's college and ABLE savings program. (a) There shall be allowed as a deduction from
the Hawaii adjusted gross income of a qualified taxpayer, contributions made to
an account in a college savings program established under chapter 256; provided
that the annual deductions for the contributions shall be no more than:
(1) $4,000 for qualified taxpayers filing a single return and for married couples filing separate returns; provided further that each spouse may claim a deduction of no more than $4,000; and
(2) $8,000 for qualified taxpayers filing joint returns, heads of household, or surviving spouses; provided further that the deduction shall be available to married couples filing joint returns if at least one spouse is an account owner in a college savings program established under chapter 256;
provided further that only a qualified
taxpayer who is an account owner in a college savings program established under
chapter 256 shall be allowed to claim the applicable deduction for contributions
made by the qualified taxpayer into the qualified taxpayer's account in the
college savings program; provided further that any contributions made to the
qualified taxpayer's account in the college savings program established under
chapter 256 for a designated beneficiary shall be reduced by any withdrawals
made for qualified higher education expenses during the same year for that
designated beneficiary.
(b) In order to be deductible for a particular
taxable year, a contribution shall be credited to the qualified taxpayer's
account in the college savings program on or before the last day of that
taxable year; provided that if a contribution is delivered by mail, it shall be
postmarked on or before the last day of that taxable year.
(c) Rollovers from a state's college savings
program into another state's college savings program shall not be considered as
contributions eligible for the tax deduction under this section.
(d) If the amount of the contribution to the
qualified taxpayer's account in a college savings program established under
chapter 256 exceeds the maximum deduction for the taxable year in which the
contribution is made pursuant to subsection (a), the excess deduction may be
used as a deduction against the qualified taxpayer's Hawaii adjusted gross
income for up to four subsequent taxable years or until the excess deduction is
exhausted, whichever occurs first.
(e) Contributions to a college savings program that
have been deducted from the qualified taxpayer's Hawaii adjusted gross income
for prior taxable years shall be subject to recapture and penalties pursuant to
section 529(c)(6) of the Internal Revenue Code of 1986, as amended, or
successor legislation, if the qualified taxpayer makes a subsequent
nonqualified withdrawal from a college savings program that results in an
additional tax penalty under section 529(c)(6) of the Internal Revenue Code of
1986, as amended, or successor legislation.
The contribution shall be recaptured by adding the amount previously
deducted, not to exceed the amount of the nonqualified withdrawal, to the
qualified taxpayer's Hawaii adjusted gross income for the taxable year in which
the nonqualified withdrawal occurred.
(f) As used in this section:
"Contribution"
means:
(1) Any payment directly allocated to a college savings program account for the benefit of a designated beneficiary, or used to pay administrative fees associated with the account; or
(2) The portion of any rollover amount treated as a contribution under section 529 of the Internal Revenue Code of 1986, as amended, or successor legislation.
"Qualified
higher education expenses" shall have the same meaning as in section
256-1.
"Qualified
taxpayer" means an individual taxpayer or a married couple filing separate
returns, whose income level qualifies to contribute to a Roth individual
retirement account under section 408A(c)(3) of the Internal Revenue Code of
1986, as amended; or each member of a married couple filing a joint return, head
of household, or surviving spouse qualifying to contribute to a Roth individual
retirement account under section 408A(c)(3) of the Internal Revenue Code of
1986, as amended.
"Rollover"
means a distribution or transfer from an account that is transferred to or
deposited within sixty calendar days of the distribution into an account of the
same person for the benefit of the same designated beneficiary or another person
who is a member of the family of the designated beneficiary; provided that the
transferee account was created under a college savings program maintained in
accordance with section 529 of the Internal Revenue Code of 1986, as amended,
or successor legislation."
SECTION 3. Section 23-95, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) This section shall apply to the following:
(1) Section 235-5.5--Deduction for individual housing account deposit;
(2) Section 235-7(f)--Deduction of property loss due to a natural disaster;
(3) Section 235-16.5--Credit for cesspool upgrade, conversion, or connection;
(4) Section 235-19--Deduction for maintenance of an exceptional tree;
(5) Section 235-55.91--Credit for the employment of a vocational rehabilitation referral;
(6) Section 235-110.2--Credit for in-kind
services contribution for public school repair and maintenance; [and]
(7) Sections 235-110.8 and 241-4.7--Credit
for ownership of a qualified low-income housing building[.]; and
(8) Section 235- --Deduction for contributions to an account under the college savings program pursuant to chapter 256."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on June 30, 3000; provided that section 2 shall apply to taxable years beginning after December 31, .
Report Title:
College Savings Program; Income Tax Deduction
Description:
Establishes a state income tax deduction for eligible contributions made to a college savings program established under chapter 256, Hawaii Revised Statutes. Effective 6/30/3000. Applies to taxable years beginning after an unspecified date. (HD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
