SB2977

Report Title:

UH; Tuition Tax Credit; Lifetime Learning

Description:

Provides a tax credit for eligible taxpayers for twenty per cent of tuition and related expenses at any UH campus, not to exceed $5,000 per year.

THE SENATE	S.B. NO.	2977
TWENTY-THIRD LEGISLATURE, 2006
STATE OF HAWAII

A BILL FOR AN ACT

 

RELATING TO UNIVERSITY OF HAWAII TUITION TAX CREDIT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the tuition at the University of Hawaii system is rising at a rate that makes higher education unaffordable for many of Hawaii's residents. The tuition is currently set at $3,504 at the Manoa campus for the 2005-2006 academic year, which gradually rises annually by $816 to $8,400 by the academic year 2011-2012. The University of Hawaii at Hilo and at West Oahu, and the community colleges, are also raising tuition but by a lesser amount.

Although the University of Hawaii has endeavored to ameliorate the tuition rise by gradually increasing the tuition over a six-year period, the amount is still high for students and their parents who have to work harder to afford the tuition and expenses. The legislature further finds students will be discouraged from pursuing higher education, which would curtail the State's efforts to cultivate an educated workforce. The long-term consequences to the State are dire. A comparatively uneducated workforce ultimately translates into an economy in which menial jobs predominate, an increase in social welfare programs, and drastically reduced state revenue.

On the federal level, the U.S. Congress has enacted the lifetime learning tax credit against federal income taxes in recognition of the problem of affordability of a college education.

The purpose of this Act is to enact an income tax credit for eligible residents for tuition and related expenses paid to the University of Hawaii.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Lifetime learning tax credit. (a) Section 25A (with respect to lifetime learning credit) of the Internal Revenue Code shall be operative for the purposes of this chapter, except as provided in subsection (c); provided that section 25A(g)(6), relating to credit for married individuals filing separate returns, and section 25A(h), relating to inflation adjustments, of the Internal Revenue Code shall not be applicable; and provided further that the tax credit provided under this section shall be available for taxable years beginning after December 31, 2005 through December 31, 2012.

(b) Each taxpayer subject to the tax imposed by this chapter, who has filed a net income tax return for a taxable year may claim a lifetime learning tax credit against the taxpayer's net income tax liability. The amount of the credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed on a timely basis.

(c) The lifetime learning tax credit shall be twenty per cent of the tuition and related expenses paid by the taxpayer during the taxable year (for education furnished during any academic period in such taxable year) at the University of Hawaii at Manoa, University of Hawaii-West Oahu, University of Hawaii at Hilo, and any of the community colleges of the University of Hawaii, not to exceed $5,000.

(d) The credit allowed under this section shall be claimed against net income tax liability for the taxable year. For the purpose of deducting this tax credit, net income tax liability means net income tax liability reduced by all other credits allowed the taxpayer under this chapter.

A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims for a tax credit under this section must be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to properly and timely claim the credit shall constitute a waiver of the right to claim the credit.

Section 469 (with respect to passive activity losses and credits limited) of the Internal Revenue Code shall be applied in claiming the credit under this section.

(e) The director of taxation may adopt any rules under chapter 91 and forms necessary to carry out this section."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2005.

INTRODUCED BY:	_____________________________