June 6, 2023

Boost Your Savings with Maine’s 2023 Tax Deduction for 529 Plans

Starting in 2023, Maine taxpayers can tap into a new benefit aimed at bolstering education savings. This comes as the state enacts a law to reinstate and augment the state income tax deduction for contributions made to any 529 education savings plan. The enhanced provision now permits a tax deduction of up to $1,000 per student – a favorable measure for those investing in future education expenses.

The deduction is open to Maine taxpayers who are earning below certain income thresholds. If you’re a single filer or married and filing separately, the cap is set at $100,000, while for those filing as head of household or married and filing jointly, it’s $200,000. The deduction applies to each student or beneficiary on whose behalf you contribute to a Section 529 plan.

Importantly, the tax perk extends to multiple beneficiaries. This means, for instance, that a grandmother who contributes to the 529 plans of her four grandchildren can claim the deduction for each, subject to the $1,000 cap per grandchild.

To claim this deduction, contributions must be made to any state’s Section 529 plan, including Maine’s NextGen 529, after January 1, 2023. Remember, to qualify for a given calendar year, contributions must be made within that year. Be sure to keep documentation of the timing of your contributions for your tax records. More detailed information is available in the Program Description under ‘Year-End Contributions’.

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