College savings proposal amended, advanced

A bill that would allow an individual to claim an income tax deduction against contributions that his or her employer makes to a state college savings account was advanced to the final round of debate May 21 after lawmakers amended it to remove the sponsoring senator’s proposal.

The Nebraska Education Savings Trust Plan provides tax-advantaged 529 accounts meant to encourage saving for postsecondary education costs. Contributions grow tax-deferred, and withdrawals are exempt from state and federal taxes as long as they are used for a beneficiary’s qualified higher education expenses.

Currently, individuals other than a NEST account’s participant, or registered owner, are ineligible for the state income tax deduction on contributions they make to the account and must open a separate account in order to receive the deduction.

As amended on general file, LB470, introduced by Gretna Sen. Andrew La Grone, would remove language referring to participants, allowing individuals to claim the tax deduction on contributions they make to any account.

LB470 also was amended to include provisions of two other bills: LB444, sponsored by Omaha Sen. Mike McDonnell, and LB545, introduced by Sen. Justin Wayne, also of Omaha.

La Grone introduced an amendment on select file, adopted 40-0, that would remove his proposal from the bill. He said the state could not afford its implementation cost this year.

The amendment also would authorize a cash transfer from the state treasurer to the state Department of Revenue to pay an expense related to Wayne’s proposal, La Grone said.

After adopting the La Grone amendment, senators advanced LB470 to final reading by voice vote.