Senate Approves Measure To Make Deposits Under College Savings Plan Tax Deductible

OKLAHOMA CITY - The State Senate has given its final approval to a measure aimed at encouraging more Oklahomans to save for their children's college education. That's according to State Senator Brad Henry and Representative Debbie Blackburn, authors of House Bill 1896, which has also been approved by the House of Representatives.

Under the Oklahoma College Savings Program, which Representative Blackburn and Senator Henry originally authored, parents and other relatives and friends can open a special savings accounts for a child's education. There would be no federal or state income taxation from the earnings and dividends until that child starts college or career tech, and then it would be at the child's tax rate, which is usually a much lower rate than parents or other adults would pay.

"Under House Bill 1896, we've made the College Savings Program even better by allowing principal contributions of up to $2,500 to be tax deductible. We've estimated that Oklahomans will enjoy a tax break of close to $700,000 a year because of this break. Basically, we've taken a great program and made it even better," said Senator Henry.

Representative Blackburn said she was hopeful the change would encourage even more Oklahomans to save for their children's education.

"When you realize that college and career tech greatly increase an individual's earning potential, and that major companies want to locate in states with a highly educated population, I'd definitely say that this is a bill that will ultimately benefit our entire state," said Representative Blackburn.

HB 1896 now awaits the Governor's signature.