Report Title:

College Savings Program Tax Credit

Description:

Establishes a college savings program tax credit (HB339 HD1).

HOUSE OF REPRESENTATIVES

H.B. NO.

339

TWENTY-SECOND LEGISLATURE, 2003

H.D. 2

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO A COLLEGE SAVINGS PROGRAM TAX CREDIT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-    College savings program tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed under this chapter, a college savings program tax credit equal to the amount determined under subsections (b) and (c). The tax credit shall apply to any contribution made on or after January 1, 2006, and before January 1, 2011, to the account of a designated beneficiary in the Hawaii college savings program under chapter 256; provided that the credit shall not apply to contributions rolled over from another account or any other source.

(b) For taxpayers filing jointly, the tax credit shall be the following amounts of the taxpayers' adjusted gross income:

If the adjusted gross income is: The tax credit shall be:

Less than $ % of the amount

contributed

$ or more, % of the amount

but less than $ contributed

$ or more, % of the amount

but less than $ contributed

$ or more, % of the amount

contributed.

(c) For taxpayers filing individually, the tax credit shall be the following amounts of the taxpayers' adjusted gross income:

If the adjusted gross income is: The tax credit shall be:

Less than $ % of the amount

contributed

$ or more, % of the amount

but less than $ contributed

$ or more, % of the amount

but less than $ contributed

$ or more, % of the amount

contributed.

(d) For taxpayers filing as head of household, the tax credit shall be the following amounts of the taxpayers' adjusted gross income:

If the adjusted gross income is: The tax credit shall be:

Less than $ % of the amount

contributed

$ or more, % of the amount

but less than $ contributed

$ or more, % of the amount

but less than $ contributed

$ or more, % of the amount

contributed.

(e) The amount of the tax credit taken shall not exceed $500 for contributions made on behalf of each designated beneficiary during each taxable year.

(f) For purposes of this section, the term "designated beneficiary" shall have the same meaning as in section 256-1.

(g) No tax credit shall be allowed under this section for any contribution made on behalf of any designated beneficiary when the value of the beneficiary's account at the time of the contribution equals or exceeds the maximum investment level referred to under subsection 256-4(l).

(h) The tax imposed by this part for the taxable year shall be increased by an amount equal to the tax credit allowed under subsection (a) for that taxable year and all prior taxable years for contributions made by the taxpayer to a Hawaii college savings program account when:

(1) The taxpayer cancels the tuition savings agreement under chapter 256; or

(2) The taxpayer makes a nonqualified withdrawal as defined in section 256-1.

(i) The director of taxation shall prepare such forms as may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91 to effectuate this section.

(j) Claims for the tax credit under this section, including any amended claims thereof, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed. Failure to properly and timely claim the credit shall constitute a waiver of the right to claim the credit.

(k) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2005.