Can I claim a federal income tax deduction based on my contributions into a 529 plan?
A. Unfortunately, there is not a federal income tax deduction for contributions into a 529 college savings plan. Q. Can I claim a state income tax deduction based on my contributions into a 529 plan? A. Many states offer residents a deduction or credit on personal income tax returns for contributions made to the in-state program and in some states for contributions to any 529 plan. As a general rule, you should contact the program in your state to determine the specific state tax rules that apply to investing in a 529 plan. Q. Are withdrawals from a 529 plan exempt from federal income tax? A. As long as the withdrawal is used to pay “qualified higher education expenses”, it is exempt from federal income tax. Q. Are withdrawals from a 529 plan exempt from state income tax? A. Most states do not tax withdrawals used to pay “qualified higher education expenses”. Several states do not have an income tax, therefore they do not tax distributions from 529 plans. As a general rule, you should
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