How much is your state's 529 plan tax deduction really worth?

Matthew Toner
By: Matthew Toner

In addition to federal tax benefits many states, offer full or partial state tax deductions for contributions to a 529 plan. Over 30 states, including the District of Columbia have such incentives available.

Seven of these states offer taxpayers a deduction for contributions to any state’s 529 plan: Arizona, Arkansas, Kansas, Minnesota, Missouri, Montana and Pennsylvania.

Seven states currently have a state income tax, but do not offer a deduction for contributions: California, Delaware, Hawaii, Kentucky, Maine, New Jersey, and North Carolina.

While tax deductions can make opening your own state’s plan seem particularly attractive, they should not be your only consideration when choosing a 529 plan. Attributes such as fees and performance must always be taken into account before you enroll in a 529 plan. In some cases, better investment performance of another state’s plan (where earnings are compounded) can outweigh the benefits of a tax deduction. To get a better idea of how much your state tax benefit is worth, check the map below:

State tax calculator

Original Post: 2017-08-09 Update 2018-09-27
Matthew Toner

Matthew Toner

Director of Institutional Research

Matthew Toner is the director of institutional research at After obtaining his B.S. degree from the University of Florida and his J.D. from Florida State University, where he specialized in business law, Matthew went on to work as a financial advisor at Waddell & Reed. He holds his Series 7 and 66 licenses.

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