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SF2594 (Legislative Session 94 (2025-2026))

Student loan income tax credit increase and making the credit refundable authorization

Related bill: HF1933

AI Generated Summary

Purpose of the Bill

The bill aims to provide financial relief to individuals dealing with student loan debt by increasing the student loan tax credit and making it refundable. This change is designed to help taxpayers manage their educational expenses more effectively.

Main Provisions

  • Increased Credit Amount: The maximum student loan credit that an individual can receive is proposed to increase from $500 to $1,000.
  • Credit Calculations: The bill outlines different methods for calculating the credit:
    1. Eligible loan payments minus 10% of adjusted gross income exceeding $10,000.
    2. The individual's earned income for the taxable year.
    3. The interest portion of eligible loan payments made during the year plus 10% of the original loan amount of all qualified loans.
    4. The new maximum cap of $1,000.
  • Refundability: The tax credit is made refundable, allowing individuals to receive a refund if the credit exceeds the amount of taxes owed.
  • Part-Year Residents: For individuals who are residents for part of the year, the credit will be allocated proportionately based on their residency duration.
  • Married Couples Filing Jointly: Each spouse is eligible for the credit. For tax purposes, each spouse's adjusted gross income will be calculated according to their share of the couple’s combined earned income.

Significant Changes

  • The increase from a $500 to a $1,000 credit doubles the financial assistance available to individuals with student loans.
  • Making the credit refundable ensures that taxpayers benefit from the credit even if it exceeds their total tax liability, potentially increasing the financial support they receive.

Relevant Terms

student loan credit, refundable tax credit, adjusted gross income, part-year resident, married couples joint return, educational expenses, financial relief.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 16, 2025SenateFloorActionIntroduction and first reading
March 16, 2025SenateFloorActionReferred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Makes the student loan credit refundable."
      ],
      "removed": [],
      "summary": "This bill modifies the student loan tax credit provisions under section 290.0682.",
      "modified": [
        "Increases the amount of the student loan credit.",
        "Amends the calculation parameters for the credit."
      ]
    },
    "citation": "290.0682"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References allocation of credit for part-year residents under section 290.06.",
      "modified": []
    },
    "citation": "290.06"
  }
]

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