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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