The maximum amount you (and your spouse, if you file jointly) can deduct to a 529 savings plans varies by state.
If your goal is to save for college, a 529 plan is the smart way to do it.
Earnings in the account grow free of federal and state taxes, and the beneficiary of the account (your child, grandchild, the child of a friend or even you) can use the money tax-free for college tuition, room and board and fees.
All states (except Wyoming) and the District of Columbia offer a 529 plan. Over 30 states and Washington also offer a state income tax credit or deduction for contributions to a 529 account.
Many plans require you to make your contributions by Dec. 31 to take a deduction for the year, although some give you until the tax-filing deadline.
The maximum amount you (and your spouse, if you file jointly) can deduct varies by state. For example, New York residents filing an individual New York State tax return can deduct contributions to a New York 529 plan of up to $5,000 per year, and a married couple filing jointly can deduct up to $10,000 per year, according to Savingforcollege.com. In Pennsylvania, the limits are $15,000 for individuals and $30,000 for couples filing jointly.
Some states have extra enticements for residents to save.
A total of 15 states offer matching contributions or other financial incentives for residents who invest in their 529 plans. For example, Colorado’s CollegeInvest 529 plan will match contributions up to $500 a year for five years, as long as the beneficiary is 8 years old or younger when the parents sign up and the family’s adjusted gross income is 400% or less of the federal poverty level ($106,000 for a family of four).
