Below are some tax tips in regards to the 529 Plan here in New Jersey. This is a part of the Comprehensive College Affordability plan in NJ's fiscal year 2022 and allows for multiple tax benefits for NJ tax payers! Read below.
529 Plan Tax Deduction
Beginning with the 2022 Tax Year, the law will allow New Jersey taxpayers to deduct 529 plan contributions of up to $10,000 per year from state taxable income. The benefit will only be available to households with an annual income of $200,000 or less. Families must contribute to the NJ Better Education Savings Trust (NJBEST) 529 plan in order to qualify. There is no requirement that the 529 beneficiary has to attend a NJ educational institution for tax free with drawls.
For tax years beginning on or after January 1, 2022, a taxpayer with gross income of $200,000 or less will be allowed a deduction, not to exceed $10,000, from the taxpayer's gross income for Tuition payments.
Tuition needs to be for an in-State institution of higher education during the taxable year for tuition costs related to the taxpayer's enrollment or attendance at the institution of higher education or related to the enrollment or attendance of a spouse or dependent of the taxpayer at the institution. Source: https://www.njbest.com/njbest/why-njbest/njbest-benefits#benefits
Matching Grant Opportunity
New Jersey residents with household adjusted gross income between $0 and $75,000 who open an NJBEST account for a new student beneficiary are eligible for a one-time matching grant of up to $750 for initial deposits into a new NJBEST 529 College Savings Plan. The matching grant is limited to no more than one account per beneficiary. Source: https://www.hesaa.org/Pages/NJBESTMatchingProgram.aspx
The NJBEST Scholarship provides a tax-free scholarship to beneficiaries of an NJBEST 529 College Savings Plan provided the beneficiary attends a college in New Jersey, the account has been open at least four years before the student enrolls in college, and contributions are $1,200 or greater by the time the student enrolls in college. Source: https://www.hesaa.org/Pages/njbestscholarship.aspx
If you have any questions about this program, our in house tax team is available to assist you. Contact us today!