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luckyrishi2002
New Member

Is there any limit for annual salary above which I cannot get tax credits for 529 investments? I currently live in WA state and I max out my 401K investment limits.

 
2 Replies
Critter-3
Level 15

Is there any limit for annual salary above which I cannot get tax credits for 529 investments? I currently live in WA state and I max out my 401K investment limits.

There is no state income tax deduction for the state of Washington.

 

Read the rules here :   

 

https://wastate529.wa.gov/faqs-dreamahead#:~:text=Keep%20in%20mind%20that%20the%20total%20contributi....

Hal_Al
Level 15

Is there any limit for annual salary above which I cannot get tax credits for 529 investments? I currently live in WA state and I max out my 401K investment limits.

There is no federal deduction for making a contribution to a 529 plan. There is no income limit for making 529 plan contributions. In fact, a 529 plan contribution is not even reported on the federal return. The tax break comes in the future, when you take the money out to pay for education.  All earnings (interest, dividends and capital gains) over the years is tax free if the distribution is used to pay for education, including room & board. 

 

There is also no income limit on claiming a tax free distribution, on the federal return, for a qualified  distribution from a 529 plan.  

 

Some states allow a deduction on the state return. If your state is one, it will come up in the state interview; usually in the "Here's how (your state) handles income differently" section.  Most (probably all) states have an income limit on the deduction.

 

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