Tax benefits for College Savings Iowa 529 Plan
We can help you save on taxes while you save for higher education.
Your College Savings Iowa 529 account assets grow deferred from federal and state income taxes.
You will not pay taxes on money withdrawn from your College Savings Iowa 529 account to pay for qualified higher-education expenses.*
Tax deductions for Iowa taxpayers
All of your College Savings Iowa 529 account earnings are exempt from Iowa state income tax. Iowa taxpayers can deduct up to $3,239 in contributions per beneficiary (student) account from their adjusted gross income for 2017. **
So, if you are married with 2 children and both you and your spouse contribute to separate accounts for each child, together you can deduct up to $12,956 (4 x $3,239) in 2017.
Looking forward to 2018, Iowa taxpayers will be able to deduct up to $3,319 in contributions per beneficiary (student) account from their adjusted gross income for 2018**
Note: Iowa taxpayers can contribute to their College Savings Iowa 529 accounts until the Iowa state income tax-filing deadline, which is generally April 30.
Qualifying contributions are deducted on line 24, item "g" of your Iowa income tax return. Most tax software programs will ask for this information and correctly indicate the appropriate reason for the deduction.
Federal gift tax incentive
You can contribute up to $75,000 in a single year for each beneficiary ($150,000 for a married couple filing jointly) without incurring federal gift tax, provided you do not make any other gifts to that beneficiary for 5 years.***
Before taking advantage of this incentive, you should consult a qualified tax advisor.
Points to consider
Your state's plan may offer additional tax benefits
If you are a resident or taxpayer of another state, you should consider whether that state offers a 529 plan with tax advantages or benefits that are not available through College Savings Iowa. Other state benefits may include financial aid, scholarship funds, and protection from creditors. Be sure to weigh all the pros and cons of a particular plan before you enroll.
There is a penalty for rolling over your assets to another state's 529 plan
If you are an Iowa state taxpayer, a rollover of assets from your College Savings Iowa 529 account to a qualified 529 plan in another state is subject to the recapture of all previous Iowa state income tax deductions made during the life of the account.
Contributions are not deductible from federal income tax
You cannot deduct the contributions that you make to any 529 college savings plan from your federal income taxes.
For more information about the tax benefits offered by College Savings Iowa, refer to our Program Description.