Senate Governance and Finance Committee Approves Calderon Scholarshare Tax Deduction Bill
SACRAMENTO – Assembly Bill 211, a measure authored by Assembly Majority Leader Ian Calderon and supported by California State Treasurer Fiona Ma, was approved by the Senate Governance and Finance Committee today. AB 211 would provide a state income tax deduction in a matching amount for contributions to one or more Scholarshare 529 accounts, with a limit of $5000 for single filers and $10,000 for those who file jointly. The bill caps the adjusted gross income level eligible for receiving the tax deduction at $75,000 for single filers and $150,000 for those who file jointly.
“AB 211 provides a tangible and meaningful incentive to assist students and their families as they prepare for their college future,” stated Majority Leader Calderon. “One of the greatest hurdles families face when preparing for higher education is the increasing cost of attending college, which has grown at a rate of two to three times the rate of inflation. Increased educational savings will help mitigate concerns about college affordability and avoid high student debt levels.”
Over the past decade, tuition and fees at public and private four-year institutions across the country have increased 26% and 36%, respectively. In California, the increases in tuition and fees have been more drastic. From 2007-2018, tuition and fees at the University of California, California State University, and California Community Colleges have jumped by 77%, 88%, and 130%, respectively. Yet, despite these alarming trends, only 56% of families with children under the age of 18 are saving for college. Of those families, only 30% use a tax-advantaged 529 college savings account.
According to a 2015 American Student Assistance study, student loan debt curtails retirement saving, home purchasing and small business creation. A state tax incentive fosters a savings and college-going culture, increasing the likelihood that participants will be able to attend and pay for college. Children with college savings accounts are seven-times more likely to attend college. A savings account is a better predictor of whether a child will attend college than race or parents’ net worth.
ScholarShare 529 is a state-sponsored, tax-advantaged 529 college savings plan that helps families and individuals save and plan for the cost of higher education. The plan is administered by the ScholarShare Investment Board, chaired by State Treasurer Fiona Ma. California is one of only seven states with a personal income tax that does not offer any type of tax incentive for saving with a 529 plan.
Contact: Lerna Shirinian (562) 692-5858