The money that you got by selling Mutual Funds will be taxable.
However, The Nebraska College Savings Plan allows residents to contribute money towards their NEST accounts and receive a Nebraska income tax deduction for the contribution amount up to $10,000. Contributions to any other state’s 529 plan are not deductible for Nebraska taxes.
So in summary, the profit from the Mutual funds will be taxed both federally and by Nebraska. There is no deduction for the federal 529 contribution. but there is for Nebraska.
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