The New Jersey College Affordability Act allows for three income tax deductions for NJ taxpayers with a gross income of $200,000 or less, as follows:
- New Jersey Education Savings Trust (NJBEST) – Contributions to NJBEST 529 could result in a state deduction up to $10,000. This deduction can amount to a maximum of $10,000 per taxpayer or $20,000 for a married couple filing jointly.
- New Jersey College Loans to Assist State Students (NJCLASS) – The amount of principal and interest paid on student loans under the NJCLASS could result in a deduction of up to $2,500.
- Tuition paid for enrollment and attendance to a New Jersey institution of higher education – taxpayers can deduct up to $10,000 for tuition costs.
The NJBEST 529 plan is an advantageous way to save for college. The plan allows funds within the accounts to grow tax-free and stay tax-free as long as the money is used for qualified education expenses, such as tuition, room and board, and supplies.
In addition, New Jersey’s college affordability plan also offers a one-time grant for initial deposits into a new NJBEST 529 College Savings Plan. This grant will match the first contribution made by a New Jersey resident in a household with an annual income of $75,000 or less. NJBEST will match any initial contributions dollar-for-dollar, with a maximum of $750 contribution match.
Lastly, New Jersey also offers the NJBEST scholarship, where students attending a New Jersey College or university can obtain a tax-free scholarship of up to $3,000.