The tax benefits for 529 savings plans just got better!

One of the greatest benefits of having a 529 college savings plan is that not only are you saving money for school, this plan also comes with many tax breaks.

Currently, the funds you’ve invested in your 529 plan are exempt from federal, state, and local taxes and the amount you accumulate are also exempt from taxes and are tax deferred. That being said, you should want to look into the specific details of your 529 plan, since each state has different stipulations. Also, there are different tax implications for those who open a savings plan from out of state; you might not have the same tax breaks available to you as they would be for those who are residents of the state. It is crucial to read all the fine print.

There have also been some changes to tax implications in recent years. Many tax free benefits were originally set to expire at the end of 2010. However, an act passed in 2006 now includes 529 college savings plan tax implications with federal income tax provisions and continuing the tax benefits it has received up until now.

Our 529 guide is a good place to start your 529 search. It provides you with the essential information you need to understand before opening a 529 college savings plan.