AB 933

This bill creates an income tax subtract modification, or deduction, for interest

or principal or both paid by a claimant on a loan taken out by a student, the proceeds

of which are used to pay for tuition, fees, books, room and board, and educational

supplies that are directly related to a student beneficiary's attendance at a regionally

accredited, nonprofit, postsecondary educational institution (student loan), but only

to the extent that such a payment exceeds the required, scheduled amount that must

be paid on the loan by the responsible party. Any person may claim the deduction

under the bill. In addition, if the student loan interest deducted under the bill was

also deducted by another individual on that other individual's federal income tax

return, such a person must add to federal adjusted gross income the amount of the

federal deduction claimed. The maximum annual deduction that a claimant may

claim for each of his or her beneficiaries is the same amount as the maximum annual

deduction that may be claimed for an amount contributed to a college savings

program, or EdVest, account. The deduction created in the bill may not be claimed

for amounts that the claimant uses to calculate the itemized deductions credit or for

amounts that relate to tuition payments for which the claimant has already claimed

a deduction under another provision of current law. Currently, this amount is $3,100

per beneficiary per year, as modified by the contributor's filing status and as indexed

for inflation.

The bill also requires lenders to provide a notice to each person from whom the

lender received payments of additional principal or additional interest during a

calendar year if 1) the lender received timely periodic payments on the student loan

during the calendar year; and 2) the lender also received payments of additional

principal or additional interest during the calendar year. The notice must be

provided by February 15 following the end of the calendar year and must identify the

total amount of additional principal and additional interest paid by the person on the

student loan during the calendar year.

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

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.