House Bill 550 — College savings income tax credit

House Bill 550 — College savings income tax credit

by
Lindsay Atkinson
March 2, 2020
Lindsay Atkinson
March 2, 2020

Bill description: HB 550 would provide a tax credit to employers that contribute to their employees’ college savings accounts. 

Rating: 0

Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

Idaho has a college savings program where individuals or parents can save for their (or their child’s) college education by putting money into a college savings account. HB 550 provides an income tax credit to employers who contribute to employees’ college savings accounts. The tax credit is “twenty percent (20%) of the total contribution per employee, but may not exceed five hundred dollars ($500) per employee, per taxable year.” An employer that does not have a tax liability would not receive the credit. 

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Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?

Under HB 550, the state would provide a tax credit to employers that perform a select activity — contributing to their employees’ college education. This tax credit comes at the expense of other taxpayers in the state. When some employers receive tax credits that lower the income taxes they pay, that special perk is not offered to other taxpayers, such as employers that have highly-educated employees that are not seeking further education. The fiscal note for HB 550 estimates the state will miss out on $100,00 in income tax for the first year this provision is implemented. 

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