Measure to increase tax deduction for education expenses clears Legislature
By The Star Staff
The island Legislative Assembly has passed a measure co-authored by Senate President José Luis Dalmau Santiago, which seeks to encourage family savings for the benefit of youth, with an expansion of the deduction allowed by the Internal Revenue Code of Puerto Rico in an educational contribution account.
Senate Bill 619, which now goes to La Fortaleza for the governor’s signature, was co-authored by Sen. Migdalia González Arroyo and states that student loan debt in Puerto Rico has reached around $213 million, which causes a financial impact on youth before completing their degrees.
According to the bill’s preamble, “the economic burden represented by student loans causes young people with big dreams and professional aspirations not to be interested in universities, as they do not have the necessary resources …”
Faced with this situation, Dalmau Santiago introduced the initiative to grant a tax benefit and promote savings.
“This measure will allow us to pay for our children’s education, with tax relief and responsible financial planning, thus reducing the expenses that are allocated for these purposes,” he said. “Likewise, we encourage our young people to choose to enter university and be much more prepared to face their professional life.”
The bill states that the deduction allowed by the Internal Revenue Code has not been changed for 10 years, despite increases in the costs of college education. In the absence of any modification, the measure proposes that the maximum amount allowed as a deduction will not exceed $500 for each beneficiary.
Also, for tax years beginning after Dec. 31, 2021, the maximum amount will not exceed $1,000. In cases where more than one relative contributes to the account created for a beneficiary, the amount of the deduction will be according to the amount contributed by the relative depositing it.