SB 106

Under current law, there is a college tuition and expenses program, commonly

referred to as "EdVest I," under which a contributor may purchase "tuition units"

that can be used to pay qualified educational costs on behalf of a beneficiary. The

purchase of the units is limited to parents, grandparents, aunts, uncles, legal

guardians, trusts created on behalf of a beneficiary, or individuals purchasing units

for their own use. Contributions made to an account set up under the program, up

to a limit of $3,000 each year for each beneficiary, may be deducted from a

contributor's income in the calculation of his or her income taxes if the beneficiary

of the account is one of the following: the claimant; the claimant's child and the

claimant's dependent under the Internal Revenue Code; the claimant's grandchild;

the claimant's great-grandchild; or the claimant's niece or nephew.

Also, under current law, there exists a college savings program, commonly

referred to as "EdVest II," under which anyone may open an account for a prospective

student, regardless of the contributor's relationship to the beneficiary. Individuals

may open accounts for themselves, and a prospective student may be the beneficiary

of more than one college savings account. Contributions made to an account set up

under the program, up to a limit of $3,000 each year for each beneficiary, may be

deducted from a contributor's income in the calculation of his or her income taxes if

the beneficiary of the account is one of the following: the claimant; the claimant's

child and the claimant's dependent under the Internal Revenue Code; the claimant's

grandchild; the claimant's great-grandchild; or the claimant's niece or nephew.

Under this bill, an income tax deduction for amounts contributed to both

EdVest I and EdVest II may be claimed by a divorced or legally separated parent of

a child. The deduction may be claimed without regard to whether the child is his or

her dependent.

Currently, the total amount for which a deduction may be claimed under EdVest

I and EdVest II, per beneficiary, by any claimant, may not exceed $3,000 each year

and, in the case of a married couple filing a joint return, the total annual deduction

under these two programs, per beneficiary, claimed by the married couple may not

exceed $3,000.

Under the bill, the total annual deduction under these two programs, per

beneficiary, claimed by married parents who file jointly or separately, or by the

divorced or legally separated parents of a child, may not exceed $3,000. The total

annual deduction under the bill, under these two programs, per beneficiary, claimed

by a married person who files separately may not exceed $1,500 per claimant. The

total annual deduction under the bill, under these two programs, per beneficiary,

claimed by a formerly married couple may not exceed a total of $3,000, or $1,500 per

claimant, except that the former couple's divorce judgment may specify a different

division of the $3,000 maximum that may be claimed by each former spouse.

Because this bill relates to an exemption from state or local taxes, it may be