HB 18-1209

HB 18-1209 is a Colorado law that stops people from getting tax deductions when they use money from a 529 education savings account for K-12 school expenses. Before, you could get these deductions if the money was used for college or other higher education costs. Now, even though federal rules allow using 529 funds for K-12 without paying federal taxes on it, Colorado won't let residents claim state tax deductions when they use those funds for elementary and secondary schools. This means that while you can still use the money from a 529 account for K-12 expenses without owing federal income tax, you will not get any additional benefit in terms of state tax deductions in Colorado. The bill has been signed into law, so this change is now effective.

Official Summary

The federal 'Tax Cuts and Jobs Act', which became law in December 2017, added distributions for elementary or secondary school expenses as qualified distributions from a qualified state tuition program, also known as a 529 account, thereby allowing, on the federal level, income tax-free distributions for elementary and secondary school expenses in addition to already authorized income tax-free distributions for higher education expenses. The bill amends Colorado law to ensure that a taxpayer may not claim a deduction for contributions to qualified state tuition programs for elementary or secondary school expenses and clarifies that such expenses are not qualified distributions. (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.) , Read More

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