Arizona Residents State Tax Benefits
Arizona residents are eligible for a $2,000 deduction to gross income per taxpayer, or $4,000 for those married, filing jointly based on contributions to the AFCSP-Bank Plan. Also, enjoy a high maximum contribution limit of $453,000, as of October 1, 2017.
Other State Tax Benefits
In addition to federal tax benefits, if you are a resident of a state listed below, you may be eligible for a state income tax deduction based on plan contributions.
- Pennsylvania Residents: For individuals subject to Pennsylvania income tax, contributions made to any 529 plan, including those offered by College Savings Bank, a Division of NexBank SSB, may be deducted from taxable income on the taxpayer’s annual personal income tax return. The maximum annual amount that may be deducted is currently $14,000 per beneficiary per taxpayer. The deduction cannot result in the taxable income being less than zero. The state law also provides that the earnings portion of any qualified withdrawal is exempt from Pennsylvania income tax.
- Maine Residents: For individuals subject to Maine income tax, receive up to a $250 tax deduction per beneficiary based on contributions to any 529 plan, including those offered by College Savings Bank, a Division of NexBank SSB . Maine taxpayers with incomes of $100,000 or less if a single filer and $200,000 or less for returns married joint filers or heads of household are eligible for a tax deduction on the contributions made in a calendar year.
- Kansas Residents: For individuals subject to Kansas income tax, any contributor may deduct up to $3,000 for single filers and $6,000 for joint filers per beneficiary for contributions to any state sponsored 529 plan including those offered by College Savings Bank, a Division of NexBank SSB .
- Missouri Residents: For individuals subject to Missouri income tax, contributions to any 529 plan, including those offered by College Savings Bank, a Division of NexBank SSB, of up to $8,000 per year ($16,000 per year for a married couple filing jointly) are deductible in computing Missouri taxable income. Only contributions made by the account owner are deductible, except for spouses filing a joint return. Rollover contributions are not deductible. Contribution deadline is December 31 postmark.
Federal 529 Plan Tax Benefits for All U.S. Residents
- Earnings grow tax-free.
- Distributions to pay qualified education expenses are tax-free.
- Anyone can participate and there are no income limitations.
- Participants also benefit through tax-free gifting. Account owners can make annual gifts of up to $14,000 single and $28,000 joint to a designated beneficiary for all accounts without incurring federal gift tax. For contributions over the limit, you may treat the money (up to $70,000 single and $140,000 joint) as having been made over a five-year period.1
- At any time you may prepay as much college and graduate school as you'd like up to $396,000 - the current maximum contribution limit.
- Assets in a 529 account are not treated as part of the federal taxable estate of the account owner who is not a designated beneficiary.
- U.S. Savings Bond owners generally may redeem bonds purchased after 1989 tax-free and deposit the proceeds in a 529 plan. IRS restrictions apply. Please see the IRS Tax Benefits for Education for current income limitations or call 800-888-2723 for more information.
- If the child does not go to college you can change the beneficiary penalty free. To avoid taxes and penalties, your new beneficiary must be a member of the family of your original beneficiary. Certain restrictions apply. Please consult your tax advisor and the Plan Disclosure for more detailed information regarding a change in beneficiary.
1. Add-back Rule: In the event the contributor does not survive the five-year period, a pro-rated amount will revert back to the contributor’s taxable estate.
NexBank, SSB and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.