529-plan expansion sent to Hutchinson

The Arkansas House and Senate voted Thursday to send Gov. Asa Hutchinson bills that would extend tax breaks to money from 529 college savings plans used for tuition at private elementary and secondary schools.

The Senate voted 22-5 to approve House Bill 1008 by House Speaker Jeremy Gillam, R-Judsonia.

On the other side of the state Capitol, the House initially voted 58-18 to approve Senate Bill 6 by Sen. Jason Rapert, R-Bigelow.

Then Rep. Vivian Flowers, D-Pine Bluff, challenged the vote. A House official sounded the ballot — the term for calling the name of each representative who voted for the bill — to determine whether they were in their seat so their vote would count. Five representatives weren’t in their seat, so the bill passed 53-18. Fifty-one votes are required for approval in the House.

Under current state law, Arkansans taxpayers can deduct up to $5,000 ($10,000 per family) each year for investments made into their 529 plans. As the plans grow, taxfree withdrawals can be made to pay for higher education expenses. Without changing state law to match recent federal changes, withdrawals for kindergarten through 12thgrade private school tuition would be subject to taxation in Arkansas.

The state Department of Finance and Administration has projected that the legislation would cost the state up to $5.2 million a year in tax revenue. That estimate assumes new 529 plans are created if the law changes to allow deductions for private school tuition, the department said.