NJ 529 deduction and gross income limits

[jman3]

There is now a NJ tax deduction for 529 contributions starting this year (https://www.njbest.com/why-njbest/njbest-benefits#benefits), and I wanted to clarify how the gross income limit applies if filing NJ state taxes as married jointly or married separately in the following. Since there is still time in the year to contribute, I was wondering how it will be implemented to see if I should take advantage of contributing in 2022.

If filing married jointly in NJ state, does that mean that up to $20,000 combined can be deducted (if each spouse has $10,000 contributions), right? And if filing jointly, is the NJ gross income limit $200,000 or $400,000 combined to be eligible for deduction regardless of who earned the income, or is each one’s income taken separately when considering the deductible of each of our $10,000 contribution?

If filing married separately, does that mean that up to $10,000 can be deducted for each separate return, and the NJ gross income limit would have to be $200,000 for each to be eligible? So if I am over the income limit, but my wife is not and we file separately, then only her $10,000 contribution would be deductible?

Thanks!

[Anonymous_]

@Hal_Al 

[Hal_Al · Accepted solution]

 If you and your spouse file separate returns, the combined deduction amounts cannot exceed $10,000.

Reference: page 24 at https://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf

[jman3]

Thank you @Hal_Al.

Just to clarify please to make sure I understand correctly, if we file NJ jointly, the gross income limit of $200,000 combined applies for a total deduction of up to $10,000.

If we file separately, then we are eligible for a total deduction of up to $10,000 (that can be split any way between the two separate returns). The only thing is that to be eligible for the deduction is if the gross income on each separate return is under $200,000.

Is this correct?

Thank you!

[Hal_Al]

I'm not from NJ and only know what I read in the instructions.  That said, yes I agrre with that interpretation.