529 Savings Plan State Tax Deductions and Credits

The vast majority of 529 savings plans, despite their state affiliation, are actually open to anyone in the United States who wants to open them (including people from states that don’t have a 529 savings plan).  So what incentive is there to open a 529 account in your home state?  In many cases, a lot.  Of the 47 states that have 529 savings plans, 34 have them have some sort of state tax incentive — either a tax deduction or tax credit — for in-state residents who invest in their 529.  Sometimes this incentive is substantial: Colorado, New Mexico, South Carolina, and West Virginia all allow residents to deduct on their state taxes the entire amount they invest in their local state’s 529 savings plan.  Sometimes this incentive is small: For Maine, the deduction is only on the first $250 invested.  Three states, Arizona, Kansas, and Pennsylvania, will allow residents to take a deduction on any 529 savings plan, even those plans not in the residents’ home states.

Because of the vast differences among states and the deductions and credits allowed, we list below every state that offers a 529 plan and what their state tax incentive is, or isn’t.

Alabama Higher Education 529 Fund: no state tax deductions or credits

Alaska T. Rowe Price College Savings Plan/John Hancock Freedom 529 Plan/University of Alaska College Savings Plan: no state tax deductions or credits

Arizona Fidelity College Savings Plan/InvestEd Plan: up to $750/year in deductions for single filers and $1,500/year for joint filers (deductions available to Arizona residents investing in any state’s 529, not just Arizona’s)

Arkansas GIFT College Investing Plan: up to $5,000/year in deductions for single filers and $10,000/year for joint filers

California ScholarShare: no state tax deductions or credits

Colorado Scholars Choice College Savings: full deduction on all money invested

Connecticut Higher Education Trust: up to $5,000/year in deductions per beneficiary for single filers and $10,000/year per beneficiary for joint filers

Delaware College Investment Plan: no state tax deductions or credits

DC 529 College Savings Plan: up to $3,000/year in deductions for single filers and $6,000/year for joint filers

Florida College Investment Plan: no state tax deductions or credits

Georgia Path2College 529 Plan: $2,000/year in deductions per beneficiary

Hawaii’s College Savings (HI529): no state tax deductions or credits

Idaho College Savings Program (IDeal): up to $4,000/year in deductions per beneficiary for single filers and $8,000/year per beneficiary for joint filers

Illinois Bright Start College Savings/Bright Directions College Savings: up to $10,000/year in deductions for single filers and $20,000/year for joint filers

Indiana CollegeChoice 529 Investment Plan: 20% tax credit, maxed out at $1,000/year

Iowa Advisor 529 Plan/College Savings Iowa: $2,595/year in deductions per beneficiary

Kansas Learning Quest/Schwab 529 College Savings Plan: up to $3,000/year in deductions per beneficiary for single filers and $6,000/year for joint filers (deductions available to Kansas residents investing in any state’s 529, not just Kansas’)

Kentucky Education Savings Plan Trust: no state tax deductions or credits

Lousiana Student Tuition Assistance and Revenue Trust (START): up to $2,400/year in deductions per beneficiary for single filers and $4,800/year per beneficiary for joint filers

Maine NextGen College Investing Plan: up to $250/year in deductions per beneficiary for filers with income under $100,000 ($200,000 for joint filers)

Maryland College Investment Plan: up to $2,500/year in deductions per beneficiary

Massachusetts College Investing Plan (U.Fund): no state tax deductions or credits

Michigan Education Savings Program: up to $5,000/year in deductions per beneficiary for single filers and $10,000/year per beneficiary for joint filers

Minnesota’s College Savings Plan: no state tax deductions or credits

Mississippi Affordable College Savings Plan: up to $10,000/year in deductions for single filers and $20,000/year for joint filers

Missouri 529 College Savings Plan (MOST): up to $8,000/year in deductions for single filers and $16,000/year for joint filers

Montana Family Education Savings Program: up to $3,000/year in deductions for single filers and $6,000/year for joint filers

Nebraska AIM College Savings Plan/College Savings Plan of Nebraska/TD Waterhouse College Savings Plan: up to $5,000/year in deductions

Nevada Columbia 529/UPromise College Fund/USAA College Savings Plan/Vanguard 529 College Savings Plan: no state tax deductions or credits

New Hampshire’s UNIQUE College Investing Plan: no state tax deductions or credits

New Jersey’s BEST Educational Savings Trust/Franklin Templeton 529: no state tax deductions or credits

New Mexico’s CollegeSense 529/Scholar’sEdge/The Education Plan: full deduction on all money invested

New York’s College Savings Program/College Savings Program Advisor Program: up to $5,000/year in deductions for single filers and $10,000/year for joint filers

North Carolina National College Savings Program: up to $2,500/year in deductions for single filers and $5,000/year for joint filers

North Dakota College SAVE: up to $8,000/year in deductions for single filers and $16,000/year for joint filers

Ohio CollegeAdvantage Savings Plan/Putnam CollegeAdvantage Savings: up to $2,000/year in deductions per beneficiary

Oklahoma College Savings Plan: up to $10,000/year in deductions for single filers and $20,000/year for joint filers

Oregon College Savings Plan/MFS 529 Savings Plan/Oppenheimer Funds 529: up to $2,000/year in deductions for single filers and $4,000/year for joint filers

Pennsylvania College Savings: up to $12,000/year in deductions per beneficiary for single filers and $24,000/year for joint filers (deductions available to Pennsylvania residents investing in any state’s 529, not just Kansas’)

Rhode Island CollegeBoundfund: up to $500/year in deductions for single filers and $1,000/year for joint filers

South Carolina Future Scholar 529 College Savings: full deduction on all money invested

South Dakota College Access 529: no state tax deductions or credits

Texas Lonestar/Tomorrow’s College Investment Plan: no state tax deductions or credits

Utah Educational Savings Plan Trust: up to $82.50 in tax credits

Vermont Higher Education Investment Plan: state tax credit of 10% on the first $2,000 in contributions per beneficiary, up to $250 per beneficiary per taxpayer

Virginia Educational Savings Trust/CollegeAmerica: up to $2,000/year in deductions (to be raised to $4,000 in 2009)

West Virginia Direct SMART529/Hartford SMART529/SMART 529 Select College Savings: full deduction on all money invested

Wisconsin EdVest College Savings Program/Tomorrow’s Scholar: up to $3,000/year in deductions per beneficiary

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