North Carolina 529 College Savings Plan Contributions No Longer Tax Deductible
For those that live in North Carolina like myself, there was a fairly quiet change pass by the NC general assembly this year that removes the state tax deductions for NC529 contributions effective January 1, 2014.
For a married couple who makes the maximum NC529 contribution that means an annual loss of up to $347 in savings on state income taxes.
Its important to note the primary benefit of tax free qualified withdrawals for education expenses remains intact. However, the loss of the state tax income deduction on contributions is one less reason to utilize the NC 529 college savings plan for those that live in North Carolina. I recently migrated our 529 contributions to the NC529 plan primary to take advantage of this state tax deduction. In 2014 I'm likely to reevaluate our 529 plan options and potential re-utilize the Ohio 529 plan which appears to have lower fees. Bummer!
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Comments (3)
I noticed the letter too regarding changes to the North Carolina 529 plan tax deductions on contributions. I have always found it difficult to navigate on the CFNC 529 website. I'm still trying to figure out the benefit of staying with CFNC as a result of this change. Why would you consider the Ohio plan over the Vanguard 529 plan? Seems like the fees would be lower through Vanguard and you already have status with them.
Posted by Aaron | November 27, 2013 6:58 AM
You didn't mention however that the overall personal income tax is decreasing as well to a flat 5.8% instead of the variable 6-7.75%. This should offset any loss from the 529 plan.
Posted by Thomas S | November 27, 2013 9:55 PM
We are lucky here in PA - we get a tax deduction for contributions to ANY 529. I researched them and selected the Utah one. I've been very pleased - both with the investment options and performance, and with the ease of withdrawing for college payments.
Posted by Jenn | December 3, 2013 4:58 PM