Bill would provide tax relief to contributions to college savings accounts

By Marc Kovac | May 7, 2015 at 12:02a.m.

COLUMBUS

The Ohio Senate approved legislation Wednesday that would provide additional tax breaks for contributions to specified college savings accounts.

SB 6 moved on a vote of 32-1 and heads to the Ohio House for further consideration. Senators included an emergency clause, meaning the proposed law changes would take effect immediately if passed and signed by the governor.

The legislation focuses on 529 plans, which allow users to save for college, with contributions and earnings not subject to federal or state taxes if they are withdrawn for college costs.

Under current law, contributions also can be deducted from state income taxes, with deductions capped at $2,000 per beneficiary per year.

SB 6 would increase the latter to $10,000 per year.

The legislation also proposes the creation of a joint legislative committee to further study college affordability issues and develop ways to reduce student costs.

Backers say the changes will serve as an incentive for increased college savings.

Sen. Shannon Jones, R-Springboro, a primary co-sponsor of the bill, said 68 percent of Ohio college graduates leave school with college debt, averaging more than $29,000.

“This is a bill that will bring much-needed additional tax benefits to Ohio families,” Jones said. “... With the increasing cost of higher education, we really need to be working on multiple strategies both to try to bring the cost down at the institutions.”

Sen. Mike Skindell, D-Lakewood, opposed the bill, citing studies that show 529 plans benefit higher-income and higher-wealth families, among other reasons.