Massachusetts 529 Tax Break: Unlock $5,290 in Savings for College

Introduction

Massachusetts residents have access to an incredible tax-saving opportunity with the state's 529 plan. This plan allows you to save for your child's college education while enjoying significant tax benefits.

The Massachusetts 529 Plan

The Massachusetts 529 Plan is a tax-advantaged savings plan that allows you to invest for your child's future education expenses. Contributions to the plan are made on an after-tax basis, but earnings grow tax-free and withdrawals for qualified educational expenses are not subject to federal or state income tax.

Massachusetts Tax Benefits

The Massachusetts 529 Plan offers the following tax benefits:

• State Income Tax Deduction: You can deduct up to $5,290 per beneficiary from your Massachusetts income taxes on contributions made to the plan.
• No State Income Tax on Earnings: Earnings on your investments in the plan are not subject to Massachusetts income tax.
• No State Income Tax on Qualified Withdrawals: Withdrawals from the plan that are used for qualified educational expenses are not subject to Massachusetts income tax.

Calculating Your Savings

The following table shows how much you can save in Massachusetts income taxes with the 529 plan:

How to Contribute

Contributions to the Massachusetts 529 Plan can be made in several ways:

• Online: You can set up an account and contribute online at the plan's website.
• Mail: You can mail your contributions to the plan's mailing address.
• Automatic Bank Transfer: You can set up automatic monthly transfers from your bank account to the plan.

Investment Options

The Massachusetts 529 Plan offers a variety of investment options, including:

• Age-Based Portfolios: These portfolios automatically adjust the investment mix based on your child's age, becoming more conservative as they get closer to college.
• Static Portfolios: These portfolios maintain a fixed allocation of stocks and bonds.
• Index Funds: These funds track a specific market index, such as the S&P 500.

Conclusion

The Massachusetts 529 Plan is an excellent way to save for your child's college education and take advantage of significant tax benefits. By contributing to the plan early and taking advantage of the tax deduction and tax-free growth, you can maximize your savings and make your child's future education more affordable.