SPRINGFIELD – State Senator Mattie Hunter (D-Chicago) led an initiative that would extend the student-assistance contribution tax credit, which was signed into law Friday. 

“As college prices continue to rise, it is crucial that some incentives or financial relief are provided when possible,” 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, 2024.

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 a contribution are eligible for a tax credit equal to 25% of the matched amount. The maximum credit is capped at $500.

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.

“Post-secondary education and training can be expensive and parents need help saving for it,” said Illinois Treasurer Michael Frerichs “This legislation incentivizes employers to pitch in and help their employees save for college.”

This measure is effective immediately.