The End (Of The 529 Year) Is Coming!

The End Of The 529 Year Is Coming!

I can’t believe it’s almost the end of 2018. Where did the year go? It seems like I was just setting my goals for the year, and *woosh!*another year is almost at its close. Before the year ends, though, make sure you get your kids’ college savings in order. You don’t want to let the tax year go by without taking advantage of savings opportunities – and with the holidays coming up, it’s the perfect time to give (or receive) the gift of college!

If you stay tuned to the end of this article, you’ll have a chance to enter the CHET Gift of College gift card giveaway sponsored by CHET, Connecticut’s 529 plan. You can use the $50 gift card to give the gift of college to others, or for your own kids.  I’m so excited for the opportunity to bring this to you!

Update – The giveaway is now closed! THank you so much to those that entered before the deadline. The winner has been contacted! Look for more giveaways in the future.

Now, lets talk about how you should look at your kids’ college savings as the year comes to a close.

This article was sponsored by Connecticut’s 529 plan CHET – the Connecticut Higher Education Trust. You can learn more about some of CHET’s awesome features in my prior article about it!

The End Of The Tax Year Approaches

Another year has flown by. Your kids are now one year older, and college is one year closer. Before the year wraps up, you want to check to make sure you’re getting all the tax advantages you are eligible for (or can afford) before December 31st.

I mentioned last month how one of the reasons I was doing a “no/low spend November” challenge was to hit my college savings goals for my boys this year. Part of the reason I want to make sure I hit it by December 31st is so I can take advantage of as much of the 2018 tax deduction as I can.

A 529 plan is a powerful tax savings machine for your children’s college education. Contributions grow tax-free, and you can take out your principal and earnings tax-free, for qualified higher education expenses. But when you throw in state tax advantages, as are available in some states (like mine), the tax savings really add up.

Every state has different rules when it comes to state tax savings on 529 plans. Some states don’t let you deduct contributions at all. Others give you a deduction, but only up to a certain amount. Those amounts are different in every state, and the states have different rules about whether you can deduct contributions to any 529 plan, or just to the ones run by their state.

State By State Deductions And Credits

Interested to know exactly what that looks like? Let’s make a table to see what the situation is across the country. Source can be found here.

State Deduction Amount Do you need to use your states 529?
Alabama $5,000 for a single taxpayer, $10,000 for married filing jointly. NOTE: Not available for Enable Savings Plan Alabama Yes
Alaska Not applicable N/A
Arizona $2,000 for a single taxpayer, $4,000 for married filing jointly. NOTE: Not available for the AZ ABLE plan Yes
Arkansas $5,000 for a single taxpayer, $10,000 for married filing jointly.   For rollover contributions, you can deduct $7,500 for a single taxpayer, $15,000 for married filing jointly For other states, $3,000 for a single taxpayer, $6,000 for married filing jointly
California Not applicable N/A
Colorado Unlimited Yes
Connecticut $5,000 for a single taxpayer, $10,000 for married filing jointly.  Yes
Delaware Not applicable N/A
District of Columbia $4,000 for a single taxpayer, $8,000 for married filing jointly. NOTE: Not available for the ABLE plan Yes
Florida Not applicable N/A
Georgia $2,000 for a single taxpayer, $4,000 for married filing jointly. NOTE: Not available for the GA STABLE plan Yes
Hawaii Not applicable N/A
Idaho $6,000 for a single taxpayer, $12,000 for married filing jointly.  Yes
Illinois $10,000 for a single taxpayer, $20,000 for married filing jointly.  NOTE: Not available for the ABLE plan Yes
Indiana A 20% tax credit on up to $5,000 per year in contributions (up to $1,000 credit). NOTE: Not available for the ABLE plan Yes
Iowa $3,319 for a single taxpayer, $6,638 for married filing jointly.  NOTE: Not available for the ABLE plan, but you can deduct up to $3,239 for rollovers to the ABLE plan from a non-IA plan Yes
Kansas $3,000 for a single taxpayer, $6,000 for married filing jointly. NOTE: Not available for the KS ABLE plan No
Kentucky Not applicable N/A
Louisiana $2,400 for a single taxpayer, $4,800 for married filing jointly. NOTE:  Contributions to START K12 accounts aren’t deductible Yes
Maine Not applicable N/A
Maryland $2,500 for a single taxpayer, $5,000 for married filing jointly.  NOTE: The MD Prepaid College Trust allows $2,500 per year, while the ABLE account allows $2,500 per beneficiary per year Yes
Massachusetts $1,000 for a single taxpayer, $2,000 for married filing jointly.  NOTE: Not available for Attainable Savings MA Yes
Michigan $5,000 for a single taxpayer, $10,000 for married filing jointly.  Yes
Minnesota Either $1,500 for a single taxpayer, $3,000 for married filing jointly OR a tax credit of 50% of the contribution, up to a credit of $500, for those with an AGI under $75k (phase out starts then) NOTE: Not available for the ABLE plan Yes
Mississippi $10,000 for a single taxpayer, $20,000 for married filing jointly.  Yes
Missouri $8,000 for a single taxpayer, $16,000 for married filing jointly.  Yes
Montana $3,000 for a single taxpayer, $6,000 for married filing jointly.   NOTE: Not available for MO ABLE No
Nebraska $10,000, $5,000 for married filing separately.  Yes
Nevada Not applicable N/A
New Hampshire Not applicable N/A
New Jersey Not applicable N/A
New Mexico Unlimited. NOTE: Not available for the ABLE plan Yes
New York $5,000 for a single taxpayer, $10,000 for married filing jointly.  NOTE: Not available for ABLE plans Yes
North Carolina Not applicable N/A
North Dakota $5,000 for a single taxpayer, $10,000 for married filing jointly.  Yes
Ohio $4,000 per beneficiary per year Yes
Oklahoma $10,000 for a single taxpayer, $20,000 for married filing jointly.  NOTE: Not available for OK STABLE plans Yes
Oregon $2,375 for a single taxpayer, $4,750 for married filing jointly.  NOTE: ABLE plans are deductible for $2,330 for single, $4,660 for joint filers Yes
Pennsylvania Can deduct up to $15,000 per beneficiary. NOTE: not available for ABLE plans No
Rhode Island $500 for a single taxpayer, $1,000 for married filing jointly.  NOTE: Not available for ABLE plans Yes
South Carolina Unlimited. NOTE: SC ABLE plan deductions are limited to $14,000  
South Dakota Not Applicable N/A
Tennessee Not applicable N/A
Texas Not applicable N/A
Utah Contributions of up to $1,960 per beneficiary for single; $3,920 per beneficiary for married filing jointly are eligible for a 5% credit Yes
Vermont Contributions of up to $2,500 per beneficiary for single; $5,000 per beneficiary for married filing jointly are eligible for a 10% VT tax credit. NOTE: Not available for the ABLE plan Yes
Virginia Up to $4,000 per account per year. NOTE: ABLE plans are $2,000 per account Yes
Washington Not applicable N/A
West Virginia Unlimited. NOTE: Not available for ABLE plans N/A
Wisconsin Up to $3,200 per beneficiary per year. Yes
Wyoming Not applicable N/A

Now, To The Giveaway!

Update – The giveaway is now closed! THank you so much to those that entered before the deadline. The winner has been contacted! Look for more giveaways in the future.

For ONE lucky winner, I’ve got two $25 CHET Gift of College gift cards – that’s $50! – perfect for any child on your list. 

CHET Gift of College Gift Cards

 
How to enter? It’s easy!  There are two ways to enter – commenting below with your college dreams for the intended recipient, or tweeting a message about this giveaway. Do both to increase your chances to win! Contest is open starting December 10th and closes on Friday, December 14th, so I have enough time to get these cards out for Christmas!

Just click the box below to get started entering the contest!

a Rafflecopter giveaway

Redeeming the CHET Gift of College gift card is easy, visit: www.aboutchet.com/redeem and follow these steps:

  • Register and create a profile with Gift of College.
  • Connect your CHET 529 account with your Gift of College account.
  • Enter your gift card information through your account profile.

Note: It may take up to seven days for the funds to appear in the account.

I’ll be contacting the winner next weekend – good luck!

P.S. Even if you’re not a winner, these would make a great gift idea for the special kids in your life. 

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22 thoughts on “The End (Of The 529 Year) Is Coming!”

    1. Hi Leslie-it’s because NC doesn’t offer a state tax deduction for 529 contributions. It was eliminated in 2014

  1. Thanks for this giveaway! Max and Charles, this is for you – may you have the choice to followfyour wildest dreams 🙂

  2. This kind of gift card is great!! I’ve never heard of anything like this… And thanks for the reminder about 529 savings for the year!

  3. What a great idea for a giveaway! My parents always prioritized going a college education for me and my siblings (because they were not able to go back in their day) so I am hoping to help my daughter ( currently 1st grade) reach her dreams by helping her as much as I can with her education.

  4. What a fun giveaway! My son is turning 12 on Wednesday so it’s always a great time to save for college! We talk a lot with him already about college and the cost, I would love for him to come out of school with significantly less student debt than my husband and I! Thanks!

  5. This is a great idea. I have a son, who is an engineer waiting to happen. He is always inventing things and dreaming up new ideas. My brother took him on a tour of his university, and after seeing the robotics lab, my son wants to go to BYU too. This blog is such a breath of fresh air! I feel like so many in the FIRE community are young singles or couples without kids, which is fine. But having a big family totally changes the conversation about money, savings, and retirement. Thanks for your perspective!

  6. I have a friend in Connecticut with twin boys around age 5. I’m sure if I win the cards, she would be surprised and delighted.
    I know if I ever won a humongous lottery, college scholarships for my friend’s kids would be on my list. Since I don’t buy lottery tickets, I suppose this is a good alternative. 🙂
    Thank you for sharing!!
    Good luck to all who enter, I know the prize will go to good use by anyone who wins!!

  7. Fellow Nutmegger here. We opened a CHET for our daughter at the beginning of this year (she was born last October). I just hope college doesn’t cost $800,000 when she gets to that age! Thanks for this nice resource, and great giveaway!

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