A proposal that would allow taxpayers in Arkansas with 529 college savings plans to use withdrawals for tuition at an elementary or secondary public, private or religious school would reduce state revenue by up to $5.2 million a year, the state Department of Finance and Administration estimated.
The maximum estimate assumes each private school family took full advantage of the plan.
The estimated financial impact is based on new 529 plans being created for the tuition costs of private K-12 students by families that do not have existing 529 plans or that have additional 529 plans set by other family members, the department said in a financial impact statement for a proposed amendment to House Bill 1122, which is the state treasurer's appropriation for fiscal 2019.
Previous federal law limited the use of funds in college savings plans to qualified higher education expenses, the finance department said. Distributions from the plans after Dec. 31, 2017, now may include tuition at an elementary or secondary public, private or religious school under the federal Tax Cuts and Jobs Act signed by President Donald Trump.
Sen. Jason Rapert, R-Bigelow, said his proposed amendment would change state law to mirror federal law to determine which educational expenses are eligible for both federal and state income tax purposes. He said the governor's office indicated that it would work with him on his proposal.
The proposed amendment is in the Joint Budget Committee's Special Language Subcommittee.
-- Michael R. Wickline