The MN Department of Revenue released the following information about the new 529 college savings plan deduction/credit….

05/29/2018
Today is National 529 College Savings Day, a day to bring awareness to the options available to save for college expenses.

Do you contribute to a college savings plan? If so, you may qualify for a new Minnesota tax benefit: the Education Savings Account Contribution Credit or Subtraction.

 

Education Savings Account Contribution Credit

Beginning in tax year 2017, you may qualify for a nonrefundable credit if you:

  • Are a full-year or part-year Minnesota resident
  • Contribute to a qualified section 529 college savings plan
  • Meet the income guidelines in the table below
If your filing status is Then your Adjusted Gross Income must be
Single, head of household, married filing separate, or qualifying widow(er) $100,000 or less
Married filing jointly $160,000 or less

How much is the credit?

The credit is 50 percent of your net contributions (contributions minus distributions) made to a 529 plan during the year up to a maximum of $500. The amount phases out if your Adjusted Gross Income is over $75,000.

 

Education Savings Account Contribution Subtraction

If you contribute to a college savings plan but do not qualify for the credit, you may qualify for a subtraction. There are no income limits to qualify for the subtraction.

How much is the subtraction?

The subtraction is equal to your contributions made to a 529 plan during the year minus any distributions. The amount you may claim depends on your filing status.

If your filing status is Then you may qualify for a subtraction up to
Single, head of household, married filing separate, or qualifying widow(er) $1,500
Married filing jointly $3,000

 

How do I claim the credit or subtraction?

Complete Schedule M1529, Education Savings Account Contribution Credit or Subtraction, when filing your Minnesota income tax return. You may claim either the credit or the subtraction, but not both.

For more information about the credit or subtraction, see our Education Savings Account webpage.