Why so little tax saving from 529 contributions?

I work in NY, reside in NJ, and contribute the maximum $10,000 deductible amount to a NYS 529 plan. My NYS tax bracket is 6.85%. After entering the 529 contributions in TurboTax my tax due to NYS decreased by only ~$50. That's 10x less than what I'd expect. I'm trying to understand why this is the case. Maybe I'm not doing it right in TurboTax? Is there some limitation with deducting 529 contributions when you live in another state? Would I be better off having a NJ 529?

1039

Expert Alumni

Mar 15, 2024 8:58:35 AM

Look at your Form IT-203 Non-resident New York return line 29 and Form IT-225 for the deduction.

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Why so little tax saving from 529 contributions?