Families often find themselves struggling to maintain a college savings account for their children. By the time a child is applying for college, families are often behind the eight-ball due to rising tuition and costs of living. The result is massive loans that put families and students in the path of the monthly financial avalanche known as student debt.
The New Jersey Better Educational Savings Trust (NJBEST) Program provides New Jersey families a place to accrue savings for their child’s education. The problem is that those savings are not income tax deductible, making college saving a zero-sum game. It is one of the many unaffordable instances of taxation in New Jersey. Republican legislators are considering introducing legislation that will provide an income tax deduction for college savings accounts.
There are multiple bills on the table that aim to make college savings easier, but none provide late-game relief for families that have fallen behind. Making college affordable in the goal of the bill, which makes a $15,000 cap much more family friendly than other bills. To limit the state’s expense and only help those likely to need it most, married couples making $250,000 and single people making over $125,000 are exempt from the deduction.
The deduction and income limits will be adjusted annually for cost-of-living increases to maintain the effectiveness of the bill. It gives New Jersey taxpayers the relief they need while promoting investment in their children’s education, making life more affordable in the present and future. CIANJ will keep you posted on the bill’s progress.