A 529 plan is tax benefit that is designed to promote saving for college. Typically, a taxpayer will contribute to a 529 plan because it allows an individual to make significant contributions with money that grows tax- free. Money from a 529 plan can be used to pay for any college related expenses, including, but not limited to: room and board, textbooks, school computers, and tuition and fees. In the past, Oregon tax payers could qualify for a tax deduction. Starting on January 1st, 2020 however, Oregon law has changed so that families may only qualify for a $300 tax credit.
In order to receive 100% tax credit on contributions, the Adjusted Gross Income (AGI) of the contributor must be less than $30,000. People with an AGI of $30,001 $70,000 are eligible for a 50% contribution tax credit. People with an AGI of $70,001 – $100,000 are eligible for a 25% contribution tax credit. People with an AGI of $100,001 – $250,000 are eligible for a 10% contribution tax credit. People with an AGI of over $250,000 are eligible for a 5% contribution tax credit. In other words, I high income taxpayer (AGI >$250k) would need to contribute $6,000 to qualify for a $300 tax credit.
Please contact your CPA to see if a 529 contribution is right for you and your family!