(BOISE) — Idahoans who are saving for college — for a child, grandchild, niece/nephew, or even for themselves — could benefit from an increased tax deduction passed by the Idaho Legislature and signed into law on March 20, 2017 by Governor C. L. “Butch” Otter. Idaho taxpayers who save for college using IDeal — Idaho’s 529 College Savings Program may deduct the amount they contribute to the savings plan from their state taxes. The new and higher tax deduction is in response to rising tuition and fees, which have increased on average by 189% since 2000, when the original tax deduction went into effect.
“We’ve set high goals for improving on the number of Idahoans who go on to higher education. This legislation will help us achieve those goals,” Governor Otter said. “Idaho employers need more well-educated workers for increasingly technical jobs in our growing economy. That means we need to do more to empower individuals and families to start preparing early for the financial requirements of a college education. House Bill 185 improves on the IDeal model for helping Idahoans help themselves.”
Rep. Caroline Nilsson Troy (R-Genesee), the bill’s sponsor, stated, “I love how this program supports our Idaho colleges and universities. The top 10 schools where these savings are spent is at our own higher education institutions. When families save for college with IDeal, they signal to their children and loved ones that higher education is a priority. Similarly, this increased deduction reinforces the message to Idaho families that we support them in their efforts to build a college-going culture in their homes.”
Previously, the maximum annual deductible amount for contributions to an IDeal account was $4,000 for single filers and $8,000 for married couples filing jointly. When Idahoans file their 2017 taxes next year, they will be able to deduct up to $6,000 as single filers or $12,000 as married couples filing jointly. The following chart shows how much IDeal account contributors, in the highest tax bracket, could potentially save on their Idaho state taxes:
|Type of filer||Max 2016 deduction||Potential 2016 tax savings||Max. 2017 Deduction||Potential 2017 Tax Savings|
Senator Mark Nye (D-Pocatello), who carried the bill on the Senate floor, added, “I was proud to carry this bill for the tens of thousands of Idaho families who use IDeal. This is an important step in our continued efforts to reduce the barriers to higher education in our state.”
With just $25, anyone can start saving for any family member (including oneself) in an IDeal account. Money saved with the Program can be used to pay for qualified expenses such as room and board, tuition, fees, books, and computers at any accredited post-secondary institution in the United States, including career and technical programs, two-year, four-year, postgraduate, and even dual-credit courses. Qualified withdrawals are free from state and federal taxes on investment earnings.
Christine Stoll, Executive Director of IDeal, noted, “We know that students’ futures can be changed by the mere fact that their families are saving for college, potentially offsetting costs down the road and setting the expectation that they will achieve great things. The state tax deductions are now better aligned with the reality of tuitions and fees that have risen since the original law was passed.”
State Treasurer Ron Crane also praised the new legislation: “I am delighted with the passage of this law. All Idahoans are the beneficiary of this increase. Idaho truly recognizes the necessity of a college education and this benefit enhancement signals how strongly the Legislature and the Governor feel about encouraging folks to get their college degrees”.
IDeal is a self-sustaining program, funded by annual asset-based management fees. For more information and to start saving, visit idsaves.org.