SPRINGFIELD – State Senator Mattie Hunter (D-Chicago) is leading an initiative that would extend the student-assistance contribution tax credit, which passed the Senate Friday.

“I am proud to sponsor this initiative to help parents get a head start on saving for their children’s college expenses,” Hunter said. “Children who have a savings account are more likely to go to college, so it is important to encourage planning early.”

Senate Bill 340 extends the sunset of the student-assistance contribution tax credit for employers from Dec. 30, 2021 to Dec. 31, 2031. Additionally, this bill provides that for taxable years on or after Dec. 31, 2021, the maximum credit will rise to $1,000 from the current amount of $500.

Currently, over 800 employers in Illinois offer their employees the ability to use payroll deduction to save a portion of their paycheck in their 529 College Savings account or Illinois Prepaid Tuition Account. Under current law, employers are incentivized to match their employees’ contributions. Employers that match an employee’s contribution are eligible for a tax credit equal to 25% of the matched amount. The maximum credit is currently capped at $500 but will rise to $1000 after Dec. 31, 2021.

“Post-secondary education and training can be expensive and parents need help saving for it,” said Illinois Treasurer Michael Frerichs, who serves as the Administrator of Illinois’ 529 College Savings Accounts, Bright Start and Bright Directions “This legislation incentivizes employers to pitch in and help their employees save for college.”

Employers may claim a credit for contributions made to either an employee’s specified individual 529 College Savings Account or Illinois Prepaid Tuition Trust Fund.

“As college prices continue to rise, it is crucial that some incentives or financial relief are provided when possible,” Hunter said. “I hope this legislation will encourage those who are hesitant about college affordability that it can be done.”

This legislation now awaits consideration in the House and can be tracked here.