Assemblywoman Susan A. Bonilla today announced she is partnering with California State Treasurer Bill Lockyer to introduce legislation to provide valuable tax relief for families that invest in the state’s 529-college savings plan, called ScholarShare.
“Children with college savings accounts are seven-times more likely to attend college,” said Assemblywoman Bonilla. “Our legislation will increase the number of families saving for college and also increase the amount of money they set aside for higher education.”
California is one of only seven states with personal income taxes that do not offer any type of tax incentives for saving with a 529 plan. Furthermore, 52 percent of California college graduates have student debt, and the average California student loan balance is $25,700.
Bonilla’s legislation, AB 1956, would encourage California families to put away more money for college by providing a refundable tax credit of 20 percent of the amount contributed to ScholarShare up to $2,500, for a maximum credit of $500 per year. The credit would be limited to taxpayers with annual incomes of $100,000 for single filers and $200,000 for joint filers.
“This tax credit plan would expand college savings opportunities for low- and middle-income families,” said Treasurer Lockyer. “That would ensure our state more broadly shares the economic prosperity created by higher education. AB 1956 also would ease student debt burdens. In the process, it would give California’s economy a long-term boost by providing families more than $1 billion to spend on goods and services they otherwise would have spent to pay off loans.”
AB 1956 will be heard in a policy committee hearing later this spring.