JBC staff proposes two-year extension and phaseout for higher-ed income tax credit

Amanda Bickel, JBC staff, presented a revised version of the higher-education income tax incentive that would continue the credit through calendar years 2025 and 2026 and then phase it out. The staff proposal includes technical fixes from prior drafts and an added requirement that institutions notify students that the credit will end.

Bickel said the simplest approach is to define eligibility by calendar year: students who begin in calendar year 2025 could claim the credit through calendar year 2026. She noted administrative costs and the complexity of grandfathering different cohorts (full time vs. part time) were factors in deciding the rolloff structure. "If you started in calendar year 2025, you can get it through calendar year 2026," she said.

Committee members asked whether the continuation would apply to incoming freshmen and how the tax-year lag affects when students actually claim credits. Jason Gallinger of the Office of Legislative Legal Services said he tried to tie continuation to page-and-line provisions that would require claiming the incentive for 2025 to be eligible in 2026. Members asked for clarity on administrative estimates and for staff to refine the rolloff mechanics before a final recommendation.

The committee did not vote on the measure at this meeting and left timing and exact grandfathering rules for further staff work.