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GOP Tax Plan Includes Provisions to Change 529 College Savings Plans
< < Back to gop-tax-plan-includes-provisions-change-529-college-savings-plansWhen federal lawmakers return to Washington next week, they’ll continue working on tax reform. StateImpact Ohio’s Ashton Marra reports the GOP plan includes a provision that supporters say would expand school choice options.
Both the House and Senate tax reform proposals include changes to the 529 college savings plan. 529s are tax-free investment accounts that are limited to paying for college expenses. GOP lawmakers want to expand their use allowing families to use up to $10,000 a year per account for K-12 private schools.
Republicans say the change increases school options, but Democrats argue only the wealthy benefit from the program’s tax breaks.
The nonprofit Brookings Institute says three-quarters of the accounts nationally are held by families with six-figure incomes.
“We have a spectrum of people that are very high income, very medium or moderate income to even lower income,” says Tim Gorrell, who oversees the program in Ohio.
Ohio doesn’t track account holder incomes, but Gorrell says he’s made the assessment based on account sizes and contributions. In 2016, the average account held less than $17,000 and the average contribution was less than $100.