Income Tax Deduction For 529 Account K-12 Kindergarten Through 12th-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, with some exceptions, but not for elementary and secondary tuition expenses. The federal "Tax Cuts and Jobs Act", which became law in December 2017, qualified distributions for elementary or secondary public, private, or religious school tuition expenses. On the federal level, this allowed income tax-free distributions for certain 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 a deduction for contributions to qualified state tuition programs for elementary or secondary public, private, or religious school tuition expenses. Designating such expenses as qualified distributions ensures that a taxpayer does not encounter tax recapture of any claimed deductions when such contributions are distributed for elementary or secondary public, private, or religious school tuition expenses.

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