STAND. COM. REP. NO. 2070

Honolulu, Hawaii

RE: S.B. No. 3062

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2018

State of Hawaii

Sir:

Your Committee on Higher Education, to which was referred S.B. No. 3062 entitled:

"A BILL FOR AN ACT RELATING TO COLLEGE SAVINGS ACCOUNTS,"

begs leave to report as follows:

The purpose and intent of this measure is to allow taxpayers to deduct contributions to a college savings account up to $5,000 per year for single and married filing separately taxpayers and $10,000 per year for married filing jointly taxpayers from the taxpayer's income.

Your Committee received testimony in support of this measure from the Oahu County Legislative Priorities Committee of the Democratic Party of Hawaii and two individuals. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that Section 529 education savings plans are already tax-favored at the state and federal levels. All contributions to Section 529 plans grow tax free and all qualifying withdrawals from those plans are received tax free. Adding another tax benefit to Section 529 plans by making contributions tax deductible when made and then allowing those contributions to grow and be used tax free in the future will help families and students pay for the increasing costs associated with higher education.

Your Committee has amended this measure by:

(1) Specifying that the deduction allowed by a taxpayer for contributions made to a college savings account shall be from the taxpayer's adjusted gross income;

(2) Deleting language that would have established an unspecified lifetime cap for the amounts allowable as a deduction for individuals and married individuals having separate college savings accounts; and

(3) Inserting an effective date of May 12, 2030, to encourage further discussion.

As affirmed by the record of votes of the members of your Committee on Higher Education that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3062, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3062, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Higher Education,

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KAIALI'I KAHELE, Chair