Are there federal and state tax advantages for opening an account?

When you make contributions to a VT529 account, your money has the chance to grow and earn interest, tax-free. And unlike many other investment options, when you withdraw your savings to use for qualified educational expenses, you can spend it tax-free too.

A state income tax credit of 10% of the first $2,500 contributed to VT529 per beneficiary per tax year is available to any Vermont taxpayer (or, in the case of a married couple filing jointly, 10% of the first $5,000 contributed per beneficiary) – a tax credit worth up to $250 per beneficiary ($500 per beneficiary for married couples filing jointly). Gifts made by a Vermont taxpayer to any VT529 account are also eligible for the credit.

Additionally, any funds that you plan to roll over from another 529 College Savings Plan are considered new contributions and may impact your taxes in a given tax year. It’s best to contact a tax advisor if you have questions about potential tax implications.