HB 1209 - No 529 Account Income Tax Deduction for K-12 Expenses
(Pettersen & Garnett/Donovan)
Under the Federal Tax Cuts & Jobs Act which was signed into law in December of 2017, families with children in kindergarten through high school will likely be allowed to benefit from a 529 account, a tax-advantaged savings plan that was previously used only for qualified higher education expenses. The federal tax bill expanded the use of these savings plans to allow contributions for qualified elementary or high school expenses to qualify for the federal tax deduction.
The legal implications of this expansion are still being determined, but the Colorado Legislative Office of Legal Services has expressed that it believes these K-12 contributions will be eligible for state income tax deductions. If this becomes current law, families could benefit from making financially responsible savings choices regardless of how old their children are.
Unfortunately, Representatives Brittany Pettersen & Alec Garnett, along with state Senator Kerry Donovan brought legislation that would not allow K-12 savings plan contributions to be eligible for the state deduction, even though nonpartisan fiscal experts at the state Capitol have interpreted current law as allowing the deduction. Thankfully, Senators Jack Tate, Jim Smallwood, and Tim Neville all voted to kill House Bill 1209 and to give Colorado families a chance at saving for their kids’ futures.
Colorado Taxpayers Advocate Fund, Inc. exists to educate citizens and Colorado public officials on issues of public policy so they can, if they choose, make a difference in their community on issues affecting their city, state, and even their country at large.