A trio of tax breaks for students and their families took effect at the start of the new year.
The programs, enacted under a bill signed into law last year, allow New Jersey residents with annual household incomes of $200,000 or less to deduct up to $22,500 from their utility bills. income tax.
“There’s been a lot of talk about making New Jersey more affordable and understanding what that means and being relevant to New Jersey families going forward,” Assembly Speaker Craig Coughlin (D- Middlesex), who sponsored the bill. “I am pleased that we are continuing to take action to remove what has been one of the biggest obstacles – perhaps the biggest obstacle – to students obtaining a degree, and it is a cost.”
Nearly 13% of New Jersey residents have federal student loan debt, with an average outstanding balance of $35,600, according to the US Department of Education. This figure does not include debt from private loans or those offered by the state.
People also read…
The first deduction allows eligible New Jerseyans to deduct up to $10,000 in in-state tuition. Tuition payments made through private and public student loans are not eligible for the deduction.
Residents can also deduct up to $2,500 in student loan payments offered through the New Jersey College Loans to Assist State Students (NJ CLASS) program.
Scholarships awarded under the Supplemental Loans Program, administered by the New Jersey Higher Education Student Assistance Authority, generally carry lower interest rates than federal and private supplemental loans. Borrowers must take out direct federal loans before using NJ CLASS.
The third deduction highlighted by Coughlin on Thursday allows residents to deduct up to $10,000 in contributions to a New Jersey Better Educational Savings Trust (NJ BEST) account. Students and their families can use tax-advantaged 529 savings accounts to pay tuition and loan costs.
The law also provides a maximum of $750 in matching funds for initial deposits into newly created NJ BEST accounts for taxpayers earning up to $75,000.
“We have this 529 savings plan for our grandchildren because we can’t imagine a more valuable or lasting gift,” said MP Mila Jasey (D-Essex), who chairs the higher education committee. from the room. “We know they’d rather have Barbies and (Matchbox) cars, let alone Nintendo Switches, but they’ll thank us later, and their parents will be glad it’s not Play-Doh.”
Filers will not see savings on deductions until they submit their tax invoices in April 2023, although matching funds for initial NJ BEST deposits are available now.
The bill passed unanimously in both houses and was signed into law by Governor Phil Murphy in June.
Last year, the Office of Legislative Services predicted the deductions would cost the state between $87.2 million and $105.9 million in lost revenue per year, with an additional one-time cost of $10 million. during the current fiscal year for corresponding deposits to NJ BEST accounts.
“We’re here from the government to help,” Coughlin said. “Children and parents deserve our support to reach their social, economic potential – to realize their dreams.”