Overview of the Mississippi College Savings Plan Tax Deduction:
Mississippi residents contributing to a Mississippi college savings plan receive a state income tax deduction of up to $10,000 "per tax return" for each adult filer. This means that even if a Mississippi resident contributes large amounts on behalf of multiple beneficiaries (children), they are only allowed to deduct a maximum of $10,000 on their return. Any amount contributed over the limit is not deductible and may not be carried forward.Couples filing jointly may deduct a combined maximum of $20,000. Again, total contributions across all beneficiaries made above $20,000 are not deductible and may not be carried forward.
The Mississippi college savings plan deduction is an "above the line" income adjustment, meaning residents can claim it even if they do not itemize their other deductions (opting for the standard deduction). There is no income phaseout on the Mississippi college savings plan tax deduction.
Value of the Mississippi College Savings Plan Tax Deduction:
Mississippi residents trying to decide whether to use the Mississippi college savings plan versus another state's Section 529 plan need to account for the potential tax savings of contributing to their in-state plan. Mississippi does not offer a tax deduction to residents contributing to out-of-state plans.Considering that the top Mississippi income tax rate is 5.00%, a full deduction of $10,000 can save a taxpayer up to $500 at tax time. Currently, Mississippi does not offer a tax deduction for contributing to other types of college savings accounts such as a Coverdell Education Savings Account (ESA) or UTMA Custodial Account.
Claiming the Mississippi College Savings Plan Tax Deduction:
Residents can claim the Mississippi college savings plan tax deduction on line 53 of their Mississippi Form 80-105.
