Assemblymember’s AB 17 would give families tax break

Assemblymember Susan Bonilla, the Concord Democrat who represents Benicia, said Tuesday she would introduce legislation to help families who are saving for their children’s college expenses.

Bonilla’s bill would provide tax relief for those investing in a Section 529 college saving plan, a state-run, tax-advantaged investment account.

“Students are constantly being hit with college tuition increases,” Bonilla said. “This measure will help curb these costs by expanding college savings opportunities for California families who are affected most by rising tuition fees.”

Earnings from 529 college savings accounts already are tax-exempt, she said, but California offers no other incentive to invest in the plans.

Bonilla said her Assembly Bill 17 addresses that.

“California is one of only seven states with personal income taxes that do not offer any type of tax incentive for saving with a 529 plan,” she said. “Changing this is long overdue.”

The bill encouraging parents to put away more money for college by providing a refundable tax credit of 20 percent of the amount contributed to the 529 savings plan, up to $2,500, for a maximum credit of $500 per year, Bonilla said.

The credit would be limited to taxpayers with an annual income of $100,000 for single filers and $200,000 for joint filers, she said.

She said her bill could help encourage more California students to pursue higher education.

“Children with college savings accounts are seven times more likely to attend college,” she said.

“This bill will not only increase the number of families saving for college, but it will increase the amount of money set aside for children and their higher education.”