Incentives To Save For College

The House gave its final approval to legislation (HB 770) that calls for tax deductions of up to $10,000 per person who contributes to North Carolina’s “529” college savings plan. NC now joins a majority of states that offer such state income tax benefits. The plan lets investors set aside money that can grow tax-deferred. The money can be withdrawn free from federal tax if used to pay for college. The bill would allow taxpayers to deduct from their taxable income up to $10,000 that is contributed to one of these 529 accounts, named for the section of the tax code that allows them. An amendment approved by the House would ensure that married couples filing their tax returns jointly could receive a deduction of as much as $20,000. The measure now goes to the Senate for consideration.