The Wisconsin Assembly’s Committee on Colleges and Universities heard and unanimously passed a bill Wednesday that offers incentives in the way of tax deductions to those helping pay college students’ tuition.
Rep. Louis Molepske, D-Stevens Point, one of the bill’s authors, explained the bill is designed to help college-aged students afford tuition by encouraging individuals to donate funds, as per the 529 Program under the Federal IRS code by offering a $3,000 tax exemption.
The bill expands the eligibility of individuals allowed to contribute to EdVest, a savings account for college. The way this account works, explained committee member Rep. Spencer Black, D-Madison, is that an individual receives both federal and state tax benefits for contributing to a child’s education. In Wisconsin, the program entails a $3,000 income tax deduction for those individuals donating money for a student’s college needs.
“Currently, you have to be related to the child to be able to get the tax credit,” Black said. “The bill that passed today expanded the people who are eligible to contribute to a child’s education account. It essentially allows anybody to contribute.”
The former policy, Molepske said, restricted who could receive the tax exemption for their contribution. The bill could provide the exemption to those who are not directly related to a student but still want to contribute to his or her education.
This created problems, he said, with people wishing to donate if they were someone other than a student’s parent. The bill not only removes these qualifiers and requirements to help but also provides incentive to do so.
“In a way,” Molepske said, “this is a ‘tax encouragement,’ in that it’s encouraging people to help with students’ education.”
According to Black, Wisconsin was the only state that had not expanded the tax exemption.
“In a sense, [this bill] just brings us into line with other states that didn’t say the donation had to be from a mom, dad, aunt or what-have-you,” Molepske said. “We had that, and now we’re just getting rid of it.”
The bill should see a vote of the full Assembly some time next week.
