STAND. COM. REP. NO. 1334
RE: H.B. No. 1469
Honorable Ronald D. Kouchi
President of the Senate
Thirtieth State Legislature
Regular Session of 2019
State of Hawaii
Your Committee on Higher Education, to which was referred H.B. No. 1469, H.D. 2, entitled:
"A BILL FOR AN ACT RELATING TO THE COLLEGE SAVINGS PROGRAM,"
begs leave to report as follows:
The purpose and intent of this measure is to establish a state income tax deduction for eligible contributions made to the Hawaii college savings program.
Your Committee received testimony in support of this measure from the Department of Budget and Finance, State Council on Developmental Disabilities, and one individual. Your Committee received comments on this measure from the Department of Taxation.
Your Committee finds that although the State established a college savings program to assist and encourage families to save and invest funds for future higher education expenses, the rate of increase in the program is much lower than in most other states' corresponding programs. A reason for this may be because most other states offer a state tax deduction or credit for contributions to their state college savings programs as an incentive for their residents to participate. Therefore, as the cost of higher education continues to rise, it is appropriate for the State to provide a similar incentive to Hawaii taxpayers to participate in Hawaii's college savings program. This measure creates an incentive that will increase the Hawaii college savings program's assets and help Hawaii families save for college instead of taking out educational loans.
Your Committee has amended this measure by:
(1) Clarifying that contributions to the Hawaii college savings program may be deducted from a taxpayer's Hawaii adjusted gross income;
(2) Specifying the maximum amount a taxpayer may claim as a deduction as follows:
(A) $4,000 for taxpayers filing a single return and for married couples filing separate returns; provided that each spouse may claim a deduction up to $4,000; and
(B) $8,000 for married couples filing joint returns, heads of household, or surviving spouses;
(3) Specifying that nonqualified withdrawals from the Hawaii college savings program shall be subject to penalties pursuant to section 256-4, Hawaii Revised Statutes; and
(4) Specifying that this measure shall apply to taxable years beginning after December 31, 2019, rather than December 31, 2018.
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 H.B. No. 1469, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1469, H.D. 2, 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,
DONNA MERCADO KIM, Chair