Income Tax Deduction For 529 Account Kindergarten Through Twelfth Grade Expenses

Current law allows contributions to a qualified state tuition program, also known as a 529 account, so long as the distributions are used for qualified higher education expenses (and some additional exceptions), but not for kindergarten through twelfth grade school expenses. The federal 'Tax Cuts and Jobs Act', which became law in December 2017, added distributions for kindergarten through twelfth grade expenses as qualified distributions thereby allowing, on the federal level, income tax-free distributions for elementary and secondary education expenses in addition to already authorized income tax-free distributions for higher education expenses.

The bill makes similar changes to Colorado law to allow contributions to qualified state tuition programs for kindergarten through twelfth grade expenses thereby allowing a taxpayer to claim a deduction for such contributions and clarifying that such expenses are qualified distributions, ensuring that a taxpayer does not encounter tax recapture of any claimed deductions when such contributions are distributed for kindergarten through twelfth grade school expenses.

(Note: This summary applies to this bill as introduced.)