Beginning with Tax Year 2022, the New Jersey College Affordability Act allows for three Income Tax deductions on New Jersey returns with a gross income of $200,000 or less. These deductions include contributions to NJBEST, payments made under NJCLASS, and tuition costs for New Jersey colleges and universities.
Contributions to a New Jersey Better Educational Savings Trust (NJBEST)
You can deduct up to $10,000 of contributions made during the year into an NJBEST account.
Example: You contribute $1,000 per month, beginning in January, and your gross income is $200,000 or less, you can deduct the maximum amount of $10,000.
Principal and Interest Paid on Student Loans under New Jersey College Loans to Assist State Students (NJCLASS)
You can deduct up to $2,500 of principal and interest paid on student loans during the year under NJCLASS if your gross income is $200,000 or less.
New Jersey Higher Education Institution Tuition Costs
If you, your spouse, or your dependent enroll in and attend a New Jersey institution of higher education, you can deduct up to $10,000 for tuition costs paid during the year.
Applicable Laws and Rules