Arizona Offers New Income Tax Deduction for College Savings Plans
Saving for College is no longer a taxing experience in Arizona.
On January 1, 2008 Arizona became the most recent state to offer a state tax deduction to residents saving for the future college education of their child, through a 529 plan. Arizona’s residents, parents and grandparents alike, can now plan for the future with the potential to lower their state income taxes. The state tax deductions can be applied with contributions of up to $750 for a single tax payer and up to $1,500 for married couples filing jointly. The new benefit starts with investments being made as of January 1, 2008.
Existing College Savings Bank customers simply need to contribute this year to be eligible for this new benefit.
While enjoying the benefits of this tax deduction, customers will still be able to withdraw tax-free, if the money is used for qualified higher education expenses. There are no eligibility limits, so all income levels can use a 529 plan. Also, when applying for financial aid, your 529 plan may not be considered. 529 distributions that are not included in income are not treated as student or parent income for purposes of federal financial aid calculations, allowing financial aid money to stay at the same availability. An account owner should check the applicable rules for financial aid programs and scholarship programs before withdrawing funds to pay qualified higher education expenses.
By enrolling in a 529 plan, such as those offered by College Savings Bank, you are providing a plan for your child’s future. 529 plans are ventures between states and investment firms meant to aid in the financing of a child’s higher education. With College Savings Bank, you can safely and wisely save for you child’s educational expenses. And for qualified Arizona residents, you may now enjoy a income tax deduction by planning ahead for your child future.
For additional information, contact a College Savings Adviser at 1-800-888-2723, or visit us at our website, http://arizona.collegesavings.com.