Tax Deduction for Idaho Residents Using the IDeal Section 529 Plan :
Idaho offers a large tax deduction for residents who contribute to the Idaho IDeal Section 529 Savings Plan. For the 2008 tax year, the maximum deduction offered is $4,000 per donor (or $8,000 for a married couple filing jointly).As with many other states, you do not need to itemize your state income tax deductions to be able to take advantage of contributing to the Idaho IDeal plan. In other words, even if you have no other deductions to claim, you can still reduce your taxable state income up to the annual contribution limits.
As with most states, distributions from the Idaho IDeal Savings Plan that are used for other things besides qualified education expenses are subject to Idaho and Federal income tax.
Value of the Idaho Section 529 Tax Deduction:
If you are considering the use of the Idaho Section 529 savings plan in lieu of other savings vehicles, you'll need to factor in the potential savings of your Idaho in-state income tax deduction. Remember, Idaho residents only receive a deduction for contributing to the Idaho Section 529 plan, not for plans from other states.Considering that the top income tax bracket for an Idaho resident is 7.80%, a couple contributing $8,000 could save up to $624 at tax time. In other words, receiving the deduction could be similar to a 7.80% bonus on the amount contributed.
Contribution Deadline:
Deductible contributions for Idaho residents must be made by December 31st of the tax year for which the deduction is desired.
