ST. PAUL, MN – On Wednesday, March 1, Rep. Randy Jessup (R-Shoreview) introduced bipartisan legislation (House File 1869), establishing income tax subtraction and credits for contributions to Minnesota College Savings Plan.
“As Minnesotans, we want the best for our children and that includes minimizing the amount of debt borne by those that attend college or a post-secondary institution,” said Rep. Jessup. “One opportunity to minimize student debt is to help families save for the post-secondary education of their children.”
All 50 states offer a Section 529 college savings plan. A 529 plan allows investment earnings to grow tax free; the funds in the account can begin to be used when a student enters a post-secondary institution.
House File 1869 will encourage Minnesota families to invest in a 529 savings plan with one of two tax incentives that best reward their efforts. The bill allows either an income deduction (up to $1,500 for individual filers and $3,000 for married joint filers) when calculating a filer’s taxes, or a tax credit (up to $500) that would reduce a filer’s tax obligation to the state.
"I received a scholarship, took out student loans, and worked three jobs to pay for college and I know today even that would likely not be enough," said Rep. Regina Barr (R-Inver Grove Heights), a co-author on the bill. "This bill will help families prepare for the ever-increasing costs of sending students to college."
“As a mother of two kids in college, a former school board member, and someone who represents students from four high schools, I have seen firsthand the struggles families go through when financially planning for their kids’ post-secondary education, said Rep. Roz Peterson (R-Lakeville), a co-author on the bill. “This bill will help addresses some of these cost concerns.”
“On average, a Minnesota college student finishes school with an average of $30,000 in student loans, which makes us the 5th highest in the country,” said Rep. Barb Haley (R-Red Wing), a co-author on the bill. “These costs are so exorbitant that they are keeping recent college graduates from becoming financially invested in a community, such as by purchasing a home or a new car.”
This legislation has been referred to the Taxes Committee for its first hearing. The bill’s author in the Senate (Senate File 1634) is Senator Roger Chamberlain, Chair of the Senate Taxes Committee.
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