(May 3) – A bill by Rep. Daniel Kagan, D-Cherry Hills Village, to help Colorado families utilize their tax refunds to save for college passed the House on second reading this evening.
“The purpose of this bill is to encourage people and to facilitate people to make college savings investments,” Rep. Kagan said. “Right now, people can only deposit their entire refund to a college savings account or get their entire refund as cash. But most families can’t afford to save their entire refund—they have debt to pay off, payments to make on their car, or their emergency savings to build back up. This bill will allow those families to invest a portion of their refund in college savings.”
HB16-1371 allows a taxpayer to split a tax refund among four options: a check, a deposit into a savings account, a deposit into a checking account, or a deposit into one or more college savings accounts. Families with more than one child would be able to deposit portions of their refund into multiple college savings accounts.
“For most low- to moderate-income families, their annual tax refund is the single largest payment they will receive all year,” said Duy Pham of the Bell Policy Center during the bill’s initial committee hearing. “With the state EITC giving a sizeable boost to low- to moderate-income families’ tax refunds, now is the time to allow Colorado taxpayers to split their state income tax refund.”
Even a small amount of savings can make a big difference. According to the Center for Enterprise Development, low- to middle-income children with $500 in college savings accounts are three times more likely to attend college, and four times more likely to graduate from college.
The bill proceeds to a third reading.