Tax exemption increases for college savings plans advanced

Lawmakers advanced a bill April 23 that would provide higher tax deductions to persons making contributions to a Nebraska College Savings Program (NCSP) account.

Currently, contributions to a NCSP account are exempt from state income tax up to $2,500 for a married person filing separately and $5,000 for a married couple filing jointly.

Under LB296, introduced by Kearney Sen. Galen Hadley, the amount of contributions exempt from income taxes would increase to $5,000 for a married person filing separately and $10,000 for a married couple filing jointly.

Hadley said students are seven times more likely to attend and succeed in college when there is a savings account in their name.

“The impact of Nebraska having a successful college savings plan cannot be measured in fiscal impact alone,” he said. “We need to think of this as an important investment that will impact the future financial viability of our state.”

An adult making contributions to an account established under either the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act — as well as rollover contributions from another state’s savings program — also would be exempt under the bill.

A Revenue Committee amendment, adopted 25-0, establishes transfer of ownership procedures. In the case of the account owner’s death and there is no successor named, ownership of the account will transfer to the beneficiary.

Senators advanced the bill on a 25-0 vote.