Michigan Senate Bill SB1002

Michigan 2023-2024 Regular Session

• Introduced: 9/17/24
• Refer: 9/17/24
• Report Pass: 10/17/24
• Refer: 10/17/24
• Report Pass: 10/23/24
• Engrossed: 11/7/24
• Refer: 11/7/24
• Report Pass: 11/13/24

Caption

Individual income tax: other; qualified higher education expenses under the Michigan education savings program; conform with most recent federal modifications. Amends secs. 2 & 16 of 2000 PA 161 (MCL 390.1472 & 390.1486).

Impact

The bill is expected to enhance the Michigan education savings program by aligning it with current federal guidelines, particularly those outlined in Section 529 of the Internal Revenue Code. By explicitly defining qualified educational expenses and ensuring that contributions to the accounts remain tax-exempt, SB1002 aims to provide more financial flexibility for families saving for higher education. This legislative change intends to encourage more residents to utilize the program, thereby promoting access to education and alleviating some financial burdens associated with higher education costs.

Summary

Senate Bill 1002 amends the Michigan Education Savings Program Act to conform with recent federal changes regarding qualified higher education expenses. This bill clarifies the use of education savings accounts and expands the definitions of various terminology related to the program. It specifically concerns the types of qualified higher education expenses that can be covered, such as fees, books, supplies, and the costs related to apprenticeship programs. Additionally, it outlines how contributions and interest associated with these accounts will be treated under state tax law.

Sentiment

The sentiment surrounding SB1002 appears to be generally positive, with lawmakers recognizing the importance of updating state laws to reflect federal adjustments. Supporters of the bill believe it will simplify the process for families and increase participation in education savings programs. However, as with many legislative changes, there are concerns about the clarity of definitions and whether this will lead to any unintended consequences for the savings account holders in the long run.

Contention

While there seems to be broad support for SB1002, discussions may arise regarding specific provisions, such as the types of qualified expenses and tax implications during account withdrawals. The requirement for alignment with federal standards could spark debates on how these changes impact state regulations. Furthermore, some stakeholders may question whether the tax policy surrounding education savings accounts adequately serves all segments of the population, particularly low-income families who may not fully benefit from tax-exemptions.