Bill would let Georgians claim state tax deduction for any federal 529 plan, remove $235,000 cap

Representative Jim Martin brought House Bill 962 to the Income Tax Subcommittee of the Ways & Means Committee, proposing to remove a $235,000 per‑beneficiary cap in Georgia law and to allow the state income tax deduction for contributions to any federally approved 529 tuition savings plan.

Martin, the bill’s sponsor, said the legislation is intended to expand “consumer choice” and help families save for college. He told the committee that allowing Georgians to use out‑of‑state plans while still receiving the state deduction would encourage more savings, and he offered an illustrative estimate that denying the deduction could cost a family roughly $12,000 over 18 years at a 5% return if they were forced to remain in a plan that no longer met their needs.

Bethany Wetzel, treasury program director at the Office of the State Treasurer, testified with reservations. Wetzel said Georgia’s Path to College plan currently offers one of the lowest all‑in fee structures in the nation and that federal IRS rules require a per‑beneficiary cap set at a ‘reasonable amount’ tied to anticipated education expenses. She told the committee the Georgia plan’s all‑in average annual asset‑based fee is 9 basis points and that program fees alone are about 4 basis points; by contrast she said adviser‑sold plans average about 84 basis points in asset‑based fees.

Wetzel and a separate witness also raised concerns that allowing tax parity could reduce assets under management in the Georgia plan, which could in turn affect contractual breakpoints with the program manager and the plan’s low‑fee advantages. Committee discussion recorded different AUM figures in testimony—Martin described the plan as having almost $6,000,000,000, while other testimony cited $7,000,000,000—so the record reflects those differing statements.

Members asked technical questions about language in the bill and the distinction between contribution limits and the state tax‑deduction limit (the draft language referred to a state tax deduction “not exceeding $4,000 per beneficiary” in one section). Treasury witnesses said the $4,000 figure in that provision is the state income tax deduction limit, not an absolute cap on contributions.

The hearing was informational only; the committee did not take a vote. Sponsors and treasury staff indicated they would continue to refine statutory language and cost estimates before a subsequent hearing.

What’s next: HB 962 had a first hearing and will return for further committee review; the bill’s fiscal and technical language will be clarified in future work sessions.