The 2023 Maine State Tax Deduction for 529 Plans
A new Maine law goes into effect in 2023, reinstating and increasing the state income tax deduction for contributions to any 529 education savings plan, providing a deduction up to $1,000 per student for Maine state taxpayers.
Who Qualifies for the Tax Deduction?
Maine state taxpayers earning less than $100,000 if filing single or married filing separately and $200,000 if filing as head of household or married filing jointly can claim a tax deduction of up to $1,000 per student (designated beneficiary) for the portion of contributions they made to the student’s Section 529 plan account.
This new tax deduction entitles qualified Maine state taxpayers to claim a separate tax deduction for contributions to more than one beneficiary. For example, if a grandmother contributes to each of her four grandchildren’s 529 accounts, she can claim a tax deduction for the portion of those contributions up to $1,000 for each grandchild.
How Do I Get the Tax Deduction?
Qualified taxpayers can get the tax deduction based on contributions made to any state’s Section 529 plan, including NextGen 529 after January 1, 2023 and going forward.
To be deductible for a calendar year, you must make the contribution before the end of that calendar year. Please see the Program Description for detailed information regarding Year-End Contributions and retain documentation of the timing of your contributions for your tax records.
Although FAME provides information about NextGen 529, FAME does not provide legal, tax or accounting advice. The information provided on the NextGenForMe.com website should not be relied upon for the purpose of tax planning or avoidance of any tax penalties that may be imposed under the Internal Revenue Code or applicable state of local tax law provisions. You should consult your tax and/or legal advisors before making any financial decisions.
Additional Tax Benefits for 529 Accounts
529 plans offer special federal and state tax benefits. Any growth from investments in a 529 account is federal and Maine state tax-free when used for qualified higher education expenses at eligible institutions.
Learn more about the ins and outs of Section 529 plans in our College Savings Guide:
Open a NextGen 529 Account
It’s never too early to start planning. Opening a NextGen 529 account now and saving can make a big difference to your child later.