Residents of Ohio who are contributing to a tax-deductible college savings plan are one step closer to additional income-tax deductions this week. The Ohio House passed Senate Bill 22 last week, which would expand Ohio’s 529 College Advantage Plan to include private schools, grades K-12. This proposed law is one that many others states in the Country have been weighing. If passed, the law would more closely reflect the Federal law and IRS changes that have been recently adopted by Congress.
Bill Will Cost Ohio $20 Million
According to tax and revenue experts, the bill is likely to result in a $20 million cost to Ohio in the form of lost tax revenue. Critics opposed to the bill claim that, if passed, it will only benefit the wealthy who are able to shell out the money for a private school. Additionally, the upper 10% of income earners in the state are the biggest contributors to Ohio’s 529 plan to being with. Still, advocates for this particular section of the larger tax overhaul that Ohio’s government is planning, claim that it has the potential to save anyone who wants to save towards the cost of their child’s education while enjoying the tax benefits will be a winner.
Ohio 529 Plans
Under current Ohio tax law, residents can allocate up to $4,000 in tax-deductible contributions per year towards their Ohio 529 plans. Funds from the CollegeAdvantage Direct 529 Plan, for the time being, are usable at any qualified college or University in the nation and was ranked first in the country for its five-year performance.
Ohio Tax Legislation
Senate Bill 22 was intended to ultimately align Ohio’s tax law with that of changes in the federal governments. Another large addition to the proposal will require the Ohio Department of Taxation to track dependents.