Kentucky case may lead to state tax parity for 529 plans
A Kentucky court decision may have implications for 529 plans around the country. The Kentucky Court of Appeals in Davis vs. Kentucky last month found that the state's income tax on out-of-state municipal bond interest was unconstitutional as a violation of the Commerce Clause since interest on in-state bonds is not taxed. Kentucky will presumably appeal the Davis decision to the State Supreme Court.
If tax "parity" is forced on the states in issuing municipal bonds, it's natural to think that the same could happen with respect to 529 plan deductions, and that any state offering such a deduction would have to open it up to residents investing in out-of-state 529 plans.
For a detailed analysis of how this case relates to the section 529 state parity issue, see this Public Finance Advisory by Len Weiser-Varon Esq. of the Mintz Levin law firm.
Return to 529 News centerIf tax "parity" is forced on the states in issuing municipal bonds, it's natural to think that the same could happen with respect to 529 plan deductions, and that any state offering such a deduction would have to open it up to residents investing in out-of-state 529 plans.
For a detailed analysis of how this case relates to the section 529 state parity issue, see this Public Finance Advisory by Len Weiser-Varon Esq. of the Mintz Levin law firm.