BILL NUMBER: S510
SPONSOR: THOMAS
 
TITLE OF BILL:
An act to amend the tax law, in relation to creating a tax credit for
employers who contribute to a college choice tuition savings account on
behalf of an employee
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of the bill is to increase New Yorkers' college savings for
their children by incentivizing employers to contribute to employees'
family tuition saving accounts, otherwise known as college choice
tuition savings accounts, or 529 plans.
 
SUMMARY OF PROVISIONS:
Section 1 of the bill amends section 210-B of the tax law by adding
subdivision 54.
Subparagraph (a) of subdivision 54 states that taxpayers are allowed a
credit against their New York State corporate income taxes if they
contribute to an employee's family tuition account as established under
article fourteen-A of the education law.
Subparagraph (b) of subdivision 54 states the amount of credit, which
shall be equal to the taxpayer's payments on behalf of an employee to a
family tuition account established under article fourteen-A of the
education law, provided it does not exceed five thousand dollars.
Subparagraph (c) of subdivision 54 states the application of the credit,
which cannot reduce the tax due to less than the fixed dollar minimum
tax as prescribed by subparagraph (d) of subdivision one of section two
hundred ten of this article. If the credit exceeds tax liability for a
given year, that excess payment will be credited to the taxpayer.
Subparagraph (d) of subdivision 54 states credit recapture, which for
provisions requiring recapture of credit, section forty-four of this
chapter applies.
Section 2 of the bill amends subparagraph (b) of paragraph 1 of
subsection (i) of section 606 of the tax law by adding a new clause,
xlv. This new clause adds the college choice tuition savings credit to
the list of investment tax credits against the personal income tax
derived from a taxpayer's income that results from holding shares in a
corporation.
Section 3 of the bill amends section 606 of the tax law by adding a new
subsection (kkk). This subsection repeats the information stated in
section 210-B subdivision 54, stating the allowance, amount, application
and recapture of the tax credit in subdivisions 1-4. This section
provides a layout of the rules associated with the new credit created in
section 2 of the bill.
Section 4 of the bill amends Section 1511 of the tax law and adds a new
subdivision (ee). This section applies the tax credit for an employer
contributing to an employee's family tuition account as established
under article fourteen-A of the education law to the corporate income
tax on insurance companies. This section states the allowance, amount,
application, and recapture of the credit in subdivisions 1-4.
Section 5 of the bill provides the effective date as immediate and will
apply to taxable years beginning on or after the first day of January
following the date on which this bill becomes a law.
 
JUSTIFICATION:
The cost of attending college is significant. According to the National
Conference of State Legislatures, in 2016, the net price to attend a
four-year public university full time for one year following the
subtraction of financial aid was $14,120, while the median amount
invested in a 529 plan in 2016 was $14,700. Even if students attended
local community, state, or city colleges, which is not always logis-
tically possible, the average 529 holder would still be unable to pay
for their child's 4-year degree. What's more, according to the Pew Char-
itable Trusts, there were 13 million 529 accounts in the US in 2017,
while according to the US Census Bureau, there were 79.2 million four-
person family households in the country.
Many New Yorkers do not have savings set aside for their children's
education. Many young New Yorkers recognize that that they must earn a
bachelor's degree to achieve their professional aspirations. Put togeth-
er, this means that many New Yorkers must choose either to not attend
college or to take on debt. Many New Yorkers have chosen the latter.
Over $90 billion is owed in student debt by almost 2.3 million New York-
ers. The Rockefeller Institute of Government indicates that in 2018 58%
of college students in New York graduated with debt, with the average
amount of that debt being $30,346. For African Americans and Latinos,
the average debt is significantly higher. Student debt hampers the
futures of college graduates, as it often delays family planning,
homeownership, and other major investments.
This debt crisis has also pushed swaths of New Yorkers away from higher
education or forced them to delay or end it due to debt prospects. More-
over, the student debt crisis is holding New York back from achieving
its full potential and affects all New Yorkers. When people have higher
debt, they are less likely to purchase consumer products, thereby
decreasing economic activity. According to a 2013 study conducted by the
Economic Policy Institute, the most successful way to increase growth in
a state is to invest in education. As a state's workforce becomes more
productive, it allows that state to attract more businesses, which caus-
es average incomes to rise.
By promoting college savings, this bill will enable parents to finan-
cially support their children's higher education, decrease student debt,
and foster New York as a prime location for businesses, families, and
individuals to thrive.
 
PRIOR LEGISLATIVE HISTORY:
2021-22: S.96 (Thomas) / A.3348 (Epstein) - Referred to Budget and
Revenue.
2019-20: S.5067 (Thomas) / A.8243 (Epstein) - Referred to Budget and
Revenue.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
Assuming that approximately 25-30 percent of employers claim the credit,
net tax receipts will decrease by approximately $15 million annually
(the average amount between 25% and 30% participation rate). The loss
of revenue to the State in State Fiscal Year 2020 is $3 million. Once it
is fully annualized, the loss of revenue to the State is approximately
$15 million per year.
 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
beginning on and after the first of January next succeeding the date on
which this bill shall have become a law.

Statutes affected:
S510: 210-B tax law, 606 tax law, 1511 tax law