(March 26) – The House Education Committee voted today 7-6 to approve a bill led by House Education Committee Chairwoman Brittany Pettersen and Assistant Majority Leader Alec Garnett, to make sure state incentives for college savings accounts are used for their intended purpose – college savings.
The federal tax bill, which is a giveaway to irresponsible corporations and the ultra-wealthy, impacts 529 savings accounts that help hardworking Colorado families save for college. The Pettersen-Garnett bill clarifies that contributions to a 529 account that are intended to be used for K-12 education expenses don’t qualify for the state deduction and amends the definitions in state law that reference section 529 to reference the section as it existed prior to the enactment of the federal changes.
“This important legislation will ensure our 529 savings accounts are used for what they were intended for – saving for college,” said Rep. Pettersen, D-Lakewood. “Public education is the greatest equalizer we have and is a public good we need to preserve.”
The Office of Legislative Legal Services produced a memorandum that said that 529 account contributions for K-12 expenses and for the other expenses added in the federal overhaul are eligible for the deduction; however, 529 account disbursements for these purposes are subject to income tax recapture, which includes a penalty and interest.
“This bill slams the door on the Trump administration’s tax giveaway to private education and guarantees Colorado does not open up a new tax haven for the wealthy and well connected,” said Assistant Majority Leader Garnett.
HB18-1209 now goes to the House floor.