HB 48 — Modify tax deductions for 529 plan and ABLE account contributions

As ReportedPassed by the House Ways and Means Committee 136th General Assembly Regular Session H.

Representatives Roemer, Thomas, D., Troy, Click, Daniels, Hall, D., Lear, Rogers, Thomas, J.J., Abrams, Barhorst, Bird, Brennan, Brownlee, Claggett, Cockley, Craig, Creech, Deeter, Dovilla, Fischer, Fowler Arthur, Ghanbari, Glassburn, Grim, Gross, Hall, T., Hiner, Holmes, Hoops, Jarrells, John, Johnson, King, Kishman, Klopfenstein, LaRe, Lawson-Rowe, Lett, Lorenz, Mathews, T., McNally, Miller, J., Miller, M., Mohamed, Newman, Odioso, Oelslager, Piccolantonio, Plummer, Rader, Ray, Richardson, Ritter, Robb Blasdel, Robinson, Russo, Salvo, Schmidt, Sigrist, Sims, Somani, Swearingen, Synenberg, Thomas, C., White, A., White, E., Williams, Workman, Young A BILL To amend sections 5747.70 and 5747.78 of the 1 Revised Code to modify the income tax deductions 2 for contributions to 529 plans and ABLE 3 accounts.

A BILL To amend sections 5747.70 and 5747.78 of the 1 Revised Code to modify the income tax deductions 2 for contributions to 529 plans and ABLE 3 accounts.

The amount of the deduction 11 shall equal the amount contributed or purchased during the 12 taxableH. year to the extent that the amounts of such 13 contributions and purchases were not deducted in determining the 14 contributor's or purchaser's federal adjusted gross income for 15 the taxable year.

The combined amount of contributions and 16 purchases deducted in any taxable year by a taxpayer or the 17 taxpayer and the taxpayer's spouse, regardless of whether the 18 H.

48 Page 2 As ReportedPassed by the House Waystaxable andyear Meansto Committeethe taxpayerextent andthat the taxpayer'samounts spouseof filesuch separate13 returnscontributions orand apurchases 19were jointnot return,deducted isin limiteddetermining tothe four14 thousandcontributor's dollarsor shallpurchaser's notfederal 20adjusted exceedgross theincome annual contribution limit for each15 beneficiarythe fortaxable 21year. whom contributions or purchases are made.

The combined amount of contributions and 16 purchases deducted in any taxable year by a taxpayer or the 17 taxpayer and the taxpayer's spouse, regardless of whether the 18 taxpayer and the taxpayer's spouse file separate returns or a 19 joint return, is limited to four thousand dollars shall not 20 exceed the annual contribution limit for each beneficiary for 21 whom contributions or purchases are made.

40 (C) In computing Ohio adjusted gross income, there shall 41 be added to federal adjusted gross income the amount of loss 42 relatedH. to tuition units and contributions that as of the end of 43 the taxable year have not been refunded pursuant to the 44 termination of a qualified tuition program payment contract or 45 account to the extent that such loss was deducted in determining 46 federal adjusted gross income.

47 H.

48 Page 3 As ReportedPassed by the House Waysrelated andto Meanstuition Committeeunits (D)and Forcontributions taxablethat yearsas inof whichthe distributionsend orof refunds43 48the aretaxable madeyear underhave anot qualifiedbeen tuitionrefunded programpursuant forto anythe reason44 othertermination 49of thana paymentqualified oftuition higherprogram educationpayment expenses,contract or the45 beneficiary'saccount 50to death,the disability,extent orthat receiptsuch ofloss awas scholarshipdeducted as described in 51determining section46 3334.10federal ofadjusted thegross Revisedincome. Code:

47 (D) For taxable years in which distributions or refunds 48 are made under a qualified tuition program for any reason other 49 than payment of higher education expenses, or the beneficiary's 50 death, disability, or receipt of a scholarship as described in 51 section 3334.10 of the Revised Code:

69 (E) As used in this section, the "annual contribution 70 limit" for taxable years beginning in 2025 equals eight thousand 71 dollars, if the taxpayer and the taxpayer's spouse file a joint 72 return,H. or four thousand dollars, in the case of all other 73 taxpayers.

For taxable years beginning in 2026 and thereafter, 74 the tax commissioner shall adjust the annual contribution limits 75 in the manner described in this division.

76 In August of each year, beginning in 2026, the 77 H.

48 Page 4 As ReportedPassed by the House Waysreturn, andor Meansfour Committeethousand commissionerdollars, shall multiply each annual contribution limit by 78 the percentage increase in the grosscase domestic product deflator 79 for that period calculated during that August under section 80 5747.025 of theall Revisedother Code;73 taxpayers.

For taxable years beginning in 2026 and thereafter, 74 the tax commissioner shall adjust the annual contribution limits 75 in the manner described in this division.

76 In August of each year, beginning in 2026, the 77 commissioner shall multiply each annual contribution limit by 78 the percentage increase in the gross domestic product deflator 79 for that period calculated during that August under section 80 5747.025 of the Revised Code;

The total amount of contributions deducted for any taxable 100 year by a taxpayer or the taxpayer and the taxpayer's spouse, 101 regardless of whether the taxpayer and the taxpayer's spouse 102 file separate returns or a joint return, shall not exceed the 103 annualH. contribution limit for each beneficiary for whom 104 contributions are made.

If the total annual contributions for a 105 beneficiary exceed the annual contribution limit, the excess may 106 be carried forward and deducted in future taxable years until 107 the contributions have been fully deducted.

108 H.

48 Page 5 As ReportedPassed by the House Waysannual and Means Committee As used in this section, "annual contribution limit" means 109 the limit prescribedfor in section 5747.70 of the Revised Code on 110 the dollar amount of contributions and purchases that a 111 taxpayer, or a taxpayer and the taxpayer's spouse, may deduct 112 during a taxable year under that section with respect to each 113 beneficiary for whom 104 contributions or purchases are madehasmade. the 114 same meaning as in section 5747.70 of the Revised Code.

If the total annual contributions for a 105 beneficiary exceed the annual contribution limit, the excess may 106 be carried forward and deducted in future taxable years until 107 the contributions have been fully deducted.

108 As used in this section, "annual contribution limit" means 109 the limit prescribed in section 5747.70 of the Revised Code on 110 the dollar amount of contributions and purchases that a 111 taxpayer, or a taxpayer and the taxpayer's spouse, may deduct 112 during a taxable year under that section with respect to each 113 beneficiary for whom contributions or purchases are madehas the 114 same meaning as in section 5747.70 of the Revised Code.