Wisconsin 529 Deduction Limit 2024: Everything You Need to Know

As a Wisconsin resident, you may be wondering about the state income tax deduction limit for 529 plans in 2024. Understanding these limits is crucial for maximizing your tax savings and planning for your child's future education expenses. Here's a comprehensive guide to help you navigate the Wisconsin 529 deduction limit for 2024.

What Is a 529 Plan?

A 529 plan is a tax-advantaged savings plan designed to help families save and invest for future education expenses. Contributions to 529 plans are made with after-tax dollars, but investment earnings grow federally tax-free and state income tax-free if used for eligible education expenses.

Wisconsin 529 Deduction Limit

Wisconsin allows a state income tax deduction for contributions made to a Wisconsin 529 plan. The deduction limit for 2024 is $4,000 per taxpayer, per year. This means that you can deduct up to $4,000 of your contributions from your state income taxes, regardless of the number of beneficiaries you have.

Married couples filing jointly can deduct up to $8,000 per year if they both contribute to the same account.

Eligibility Requirements

To qualify for the Wisconsin 529 deduction, you must meet the following requirements:

• Be a Wisconsin resident
• Contribute to a Wisconsin 529 plan
• Itemize your deductions on your state income tax return

How to Claim the Deduction

To claim the Wisconsin 529 deduction, you must:

1. Open a Wisconsin 529 plan
2. Contribute to the plan by December 31, 2024
3. Itemize your deductions on Wisconsin Schedule I (Form 1) of your state income tax return
4. Enter the amount of your deductible contributions on line 77 (line 72 for married couples filing jointly)

Tax Benefits of 529 Plans

In addition to the state income tax deduction, 529 plans offer several federal tax benefits:

• Tax-free investment earnings: Earnings on 529 investments grow federally tax-free.
• Tax-free withdrawals for education expenses: Withdrawals used for qualified education expenses are not subject to federal income tax or capital gains tax.

Common Mistakes to Avoid

When contributing to a Wisconsin 529 plan, avoid these common mistakes:

• Contributing more than the deduction limit: Contributions above the limit will not qualify for the deduction.
• Using non-deductible contributions: Only contributions made to a Wisconsin 529 plan are eligible for the deduction.
• Not itemizing deductions: You must itemize your deductions on your state income tax return to claim the deduction.

Conclusion

Understanding the Wisconsin 529 deduction limit for 2024 is essential for maximizing your tax savings. By contributing to a 529 plan and claiming the deduction, you can significantly reduce your state income taxes and invest in your child's future education. If you have any questions or need further assistance, please consult a tax professional or visit the Wisconsin Department of Revenue website.

Additional Resources

• Wisconsin Department of Revenue 529 Plan Information
• Vanguard Wisconsin 529 Plan
• Edvest Wisconsin 529 Plan