Provides for a personal income tax deduction for student loan payments.
TITLE OF BILL: An act to amend the tax law, in relation to authorizing a personal income tax deduction for student loan payments
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to help alleviate the crushing burden of student loan debt that many young New Yorkers and their parents face.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 41 which provides that a taxpayer with student loan debt incurred on behalf of himself, his spouse, or a dependent may take an above-the-line deduction of up to $5,000 in student loan debt not already covered by federal tax deductions and credits.
This bill is intended to fill a critical need for young college graduates in a difficult job market where more than two million graduates are unemployed. At the same time, student loans are becoming more and more a necessity, with public-university tuitions more than doubling in the past twenty years, well above the rate of inflation.
The Project on Student Debt (projectonstudentdebt.org) reports the average student loan debt in 2012 for a bachelor's degree was $25,500. Borrowers now hold more than $1 trillion in student loan debt - more than credit cards and second only to mortgages.
In December of 2012, the Federal Reserve announced that the student loan 90-day delinquency rate increased to 11% and for the first time exceeded the "serious delinquency" rate for credit card debt. The crushing student loan debt keeps New Yorkers out of the middle class. This bill would allow taxpayers to use up to $5,000 per year in pre-tax dollars to repay student loans.
PRIOR LEGISLATIVE HISTORY:
To be determined.
Shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2015.
STATE OF NEW YORK ________________________________________________________________________ 473--A 2013-2014 Regular Sessions IN SENATE (PREFILED) January 9, 2013 ___________Introduced by Sen. STAVISKY -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations -- recommitted to the Committee on Investigations and Government Operations in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the tax law, in relation to authorizing a personal income tax deduction for student loan payments THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 41 to read as follows: (41) PAYMENT NOT IN EXCESS OF FIVE THOUSAND DOLLARS ACTUALLY PAID BY AN ELIGIBLE BORROWER FOR STUDENT LOAN REPAYMENT, TO THE EXTENT NOT DEDUCTIBLE IN DETERMINING FEDERAL ADJUSTED GROSS INCOME AND NOT REIM- BURSED. FOR THE PURPOSES OF THIS PARAGRAPH, THE FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS: (I) "STUDENT LOANS" MEANS ANY INDEBTEDNESS INCURRED BY THE TAXPAYER SOLELY FOR ANY QUALIFIED EDUCATION LOAN TO THE EXTENT PROVIDED IN SECTION 221 OF THE INTERNAL REVENUE CODE. (II) "ELIGIBLE BORROWER" SHALL MEAN A TAXPAYER WHO HAS INCURRED INDEBTEDNESS ON STUDENT LOANS AS DEFINED IN SUBPARAGRAPH (I) OF THIS PARAGRAPH ON BEHALF OF THE TAXPAYER, THE TAXPAYER'S SPOUSE, OR ANY DEPENDENT OF THE TAXPAYER AS OF THE TIME THE INDEBTEDNESS WAS INCURRED. S 2. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2015.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD02740-02-4