State Senator David J. Cappiello, R-Danbury, today said that he wants to extend the tax credits currently available to participants of the state’s college savings program to anyone who may be contributing to an out-of-state plan.  According to Sen. Cappiello, the legislature last year passed a measure that would provide tax incentives of up to $5,000 for individual filers and $10,000 for joint filers for those who contribute to Connecticut’s Higher Education Trust (CHET) program, the state’s 529 college fund program.  The new law however did not allow for a tax deduction for anyone who may be contributing to out of state 529 plans.

“This would simply extend this tax credit to other state 529 plans,” said Sen. Cappiello. “What’s important is that not only are we encouraging people to save for future college costs but we would be giving them all the necessary tools to do so.  By not limiting the tax credits to Connecticut’s 529 plan only we would be giving people more options for them when they are determining how to save for college.”

Sen. Cappiello said that while only states can establish and sponsor 529 plans, most state plans (including Connecticut) are run by private financial services firms.  According to Sen. Cappiello, state residents do not have to open a CHET plan, they are free to look at other states’ plans, however to qualify for the state tax deduction they must have the Connecticut plan.  He said that people who already had out of state plans before last year’s law was enacted should benefit from the tax deduction.

At least three other states (Maine, Kansas & Pennsylvania) currently provide or have a plan in place that provides state tax benefits for contributions made to any state’s 529 plan according to Sen. Cappiello.

“My feeling is that if you are putting money aside for college, regardless of which plan you are using, you should get the tax deduction,” said Sen. Cappiello.  “Higher education costs are rising, and as a legislature we should be doing everything possible to help Connecticut families save.  Extending this tax deduction to include out of state plans would do just that.”

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