SB 601

This bill creates an individual income tax subtraction, or deduction, for principal or interest paid on qualified education loans, to the extent that the claimant has not withdrawn the payment from a college savings account or has not already deducted the interest payment from the claimant’s gross income. The bill limits the amount of the deduction to $5,130 for the 2026 tax year, and the Department of Revenue must annually adjust the limit based on the rate of inflation. Under current federal and state law, a claimant may deduct up to $2,500 of qualified education loan interest paid per year, and the maximum deduction amount is phased down to zero as the claimant’s income rises to the annual income limit that is set under federal law.

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.