Beginning in 2022, there is good news for taxpayers who pay some student loans and/or tuition. The New Jersey College Affordability Act allows for three income tax deductions on New Jersey returns that are related to education. The caveat is that the gross income reported on the return must be under $200,000.
For eligible taxpayers, contributions of up to $10,000 per taxpayer per year to a New Jersey Better Education Savings Trust (NJBEST) account can now be deducted. The NJBEST is a 529 Plan that can be used to fund tuition, both in-state and out-of-state, and can also be used for student loan payments. For more information on 529 plans and their uses, please contact your tax preparer.
A New Jersey College Loans to Assist State Students (NJCLASS) is a supplemental loan that can be used only to cover a student’s unmet need after all other aid, including Federal Direct Loans, is subtracted from the cost of attendance. Taxpayers can now deduct up to $2,500 of principal and interest paid on these student loans during the year.
Finally, taxpayers can now deduct up to $10,000 in tuition costs if the taxpayer or a dependent enrolls and attends an institution of higher education located in New Jersey.
For more information about these new tax benefits, please contact your tax preparer.
Article Submitted by Joseph P. Marino, CPA