Legislative Updates

The Colorado State Legislature passed a bill in 2021 that makes several changes to the Colorado tax code, including one change that would impact CollegeInvest account owners:

The bill places an annual cap on the state income tax deduction for CollegeInvest contributions, depending on the filing status.

For the 2022 tax year, this was a per taxpayer/per-beneficiary cap of $20,000 annually for single filers and a per taxpayer/per-beneficiary cap of $30,000 annually for those who file a joint return.

For income tax years on or after January 1, 2023, the cap is annually adjusted by the percentage change in the combined average annual costs of tuition and room and board for all state institutions of higher education.

For the 2023 tax year, this is a per taxpayer/per-beneficiary cap of $20,700 annually for single filers and a per taxpayer/per-beneficiary cap of $31,000 annually for those who file a joint return.

For the 2024 tax year, this is a per taxpayer/per-beneficiary cap of $22,700 annually for single filers and a per taxpayer/per-beneficiary cap of $34,000 annually for those who file a joint return.

The Colorado State Legislature passed a bill in 2021 that makes several changes to the Colorado tax code, including one change that would impact CollegeInvest account owners:

The bill places an annual cap on the state income tax deduction for CollegeInvest contributions, depending on the filing status.

For the 2022 tax year, this is a per taxpayer/per-beneficiary cap of $20,000 annually for single filers and a per taxpayer/per-beneficiary cap of $30,000 annually for those who file a joint return.

For income tax years on or after January 1, 2023, the cap will be annually adjusted by the percentage change in the combined average annual costs of tuition and room and board for all state institutions of higher education.

For the 2023 tax year, this is a per taxpayer/per-beneficiary cap of $20,700 annually for single filers and a per taxpayer/per-beneficiary cap of $31,000 annually for those who file a joint return.

Please feel free to contact us if you have additional questions in the meantime.

The SECURE Act of 2019 expanded the qualified use of 529 savings accounts by allowing withdrawals for apprenticeships. Section 529 of the federal tax code sets the general rules of qualified tuition programs, which authorizes each state to administer its own program and determine its unique state tax treatment and other policies.

In Colorado, the intent of the state’s 529 college savings plan, CollegeInvest, is to encourage savings for higher education. The Governor’s office has determined that apprenticeship programs are qualified higher education expenses. The Department of Labor provides a search tool to find out if your particular apprenticeship program is eligible. The Colorado Department of Labor and Employment also has a Registered Apprenticeship Program Directory here. If it is, 529 plan funds can be used towards program fees, books, supplies and equipment, including the tools needed for the trade.

Please feel free to contact us if you have additional questions in the meantime.

The Colorado State Legislature recently passed a bill that would make several changes to the Colorado tax code, including one change that would impact CollegeInvest account owners:

The bill places an annual cap on the state income tax deduction for CollegeInvest contributions, depending on the filing status.

This is a per taxpayer/per-beneficiary cap of $20,000 annually for single filers and a per taxpayer/per-beneficiary cap of $30,000 annually for those who file a joint return.

For income tax years on or after January 1, 2023, the cap will be annually adjusted by the percentage change in the combined average annual costs of tuition and room and board for all state institutions of higher education.

The cap will be effective starting January 1, 2022.

Please feel free to contact us if you have additional questions in the meantime.

On June 20, 2020, Governor Polis signed the Tax Credit Employer Contributions to Employee 529s Act (HB20-1109). This extended the Working Families College Savings Act (HB18-1217) through the tax year ending December 31, 2032. This bipartisan bill is an innovative resource for Colorado employers to boost their employee’s CollegeInvest 529 college savings accounts. It provides a Colorado tax credit for employers who contribute to CollegeInvest savings plans owned by their employees.

For more information, click here.

The SECURE Act of 2019 expanded the qualified use of 529 savings accounts by allowing withdrawals for student loan repayments. Section 529 of the federal tax code sets the general rules of qualified tuition programs, which authorizes each state to administer its own program and determine its unique state tax treatment and other policies.

In Colorado, the intent of the state’s 529 college savings plan, CollegeInvest, is to encourage savings for higher education. Colorado tax law remains unchanged and CollegeInvest 529 plans can only be used for qualified higher education expenses. Any other use, including student loan repayments, are considered non-qualified withdrawals and subject to penalties.

Colorado taxpayers should consult their tax advisors before making a withdrawal for student loan repayments and before making a contribution which they intend to ultimately withdraw for student loan repayments. It will take an act of the legislature to extend the favorable Colorado state tax treatment to withdrawals for student loan repayments. If a withdrawal is not qualified for state tax purposes, it would trigger a deduction recapture under Colorado tax law.

Please feel free to contact us if you have additional questions in the meantime.

A bill was introduced into the House that would’ve modified the Colorado state income tax deduction for contributions to a CollegeInvest 529 college savings account. It would’ve allowed a Colorado tax deduction for contributions in connection with qualified kindergarten through twelfth grade (K-12) education expenses including those for enrollment or attendance at a public, private, or religious school, and required that such withdrawals not be subject to state income tax recapture. It was heard in the House Education Committee on February 19th and failed of a 5-7 vote. Colorado tax law remains unchanged and CollegeInvest 529 plans can only be used for qualified higher education expenses. Any other use, including K-12 tuition expenses, are considered non-qualified withdrawals and subject to penalties.

On May 29, 2018, Governor Hickenlooper signed the Working Families College Savings Act (HB18-1217). This bipartisan bill is an innovative resource for Colorado employers to boost their employee’s CollegeInvest 529 college savings accounts. Beginning in January 2019, this legislation will provide a Colorado tax credit for employers who make contributions to CollegeInvest savings plans owned by their employees.

For more information, click here.

The Tax Cuts and Jobs Act of 2017 expanded the qualified use of 529 savings accounts by allowing withdrawals for K-12 tuition expenses. Section 529 of the federal tax code sets the general rules of qualified tuition programs, which authorizes each state to administer its own program and determine its unique state tax treatment and other policies.

In Colorado, the intent of the state’s 529 college savings plan, CollegeInvest, is to encourage savings for higher education. Colorado tax law remains unchanged and CollegeInvest 529 plans can only be used for qualified higher education expenses. Any other use, including K-12 tuition expenses, are considered non-qualified withdrawals and subject to penalties.

Please feel free to contact us if you have additional questions in the meantime.