OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 125 Bill Analysis
135th General Assembly
Click here for H.B. 125’s Fiscal Note
Version: As Passed by the House
Primary Sponsors: Reps. Mathews and Santucci
Effective date:
Zachary P. Bowerman, Attorney
SUMMARY
▪ Increases the income tax deduction limit for contributions to a 529 college savings plan
or ABLE disability savings account for joint filers from $4,000 – the same limit as single
filers − to $8,000.
▪ Indexes the amount of both limits so that they increase in proportion to the increase in
inflation.
DETAILED ANALYSIS
Income tax deduction for 529 plans and ABLE accounts
Under continuing law, an Ohio income tax deduction is available for taxpayers who
make contributions to any 529 college savings plan or an Ohio ABLE disability savings account. A
529 plan is a tax-advantaged investment account sponsored by a state or state agency that can
be used to pay for qualified education expenses for a designated beneficiary, including costs for
books, supplies, and tuition for college, K-12, and apprenticeship programs. Earnings are not
subject to federal and state income tax when used for such qualified education expenses. The
beneficiary can be the account holder or another person.1 ABLE accounts, named for the
federal Achieving a Better Life Experience Act of 2014, are similar savings accounts
administered by the states which can help designated beneficiaries pay for qualified disability
expenses. In Ohio, they are referred to as STABLE accounts. Contributions to ABLE accounts
administered by other states do not qualify for the deduction.2
1 See the Learn page on Ohio’s 529 College Advantage website: collegeadvantage.com/learn.
2 See the About Us page on Ohio’s STABLE account website: stableaccount.com/about-us.
December 13, 2024
Office of Research and Drafting LSC Legislative Budget Office
The value of the deduction equals the amount of contributions made in the preceding
year except that, under current law, the annual deduction is limited to $4,000 per account
contributed to for all taxpayers, whether filing a single or joint return. Any contributions to a
single account in excess of the limit may be carried forward until they are fully deducted. The
bill raises the deduction limit for joint filers to $8,000 for taxable years beginning in or after
2023.
The bill also indexes these contribution limits for inflation, based on increases in the
prices of all goods and services composing the national gross domestic product (GDP),
beginning in tax year 2024. The adjustments are made by multiplying the current year’s
limitation amount by the percentage increase in the GDP deflator over the preceding year,
adding that result to the current limitation amount, and rounding the result to the nearest $50.
An adjustment would not be made for any year the GDP deflator does not increase.3
HISTORY
Action Date
Introduced 03-21-23
Reported, H. Ways & Means 06-07-23
Passed House (90-0) 12-10-24
ANHB0125PH-135/ts
3 R.C. 5747.70 (529 plans) and 5747.78 (ABLE accounts).
P a g e |2 H.B. 125
As Passed by the House


Statutes affected:
As Introduced: 5747.70, 5747.78
As Reported By House Committee: 5747.70, 5747.78