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The Wisconsin 529 Plan Deduction for WI Residents

Rules for Claiming the $3,000 Tax Deduction for Funding a WI 529 Plan

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Overview of the WI 529 Plan Tax Deduction:

Wisconsin residents who contribute to a Wisconsin 529 Plan can deduct up to $3,000 from their state income tax return for each account they contribute to on the behalf of themselves, a spouse, child, grandchild, great-grandchild, niece, or nephew.

Wisconsin does not allow married couples filing jointly to double their deduction and does not provide a carried forward provision for amounts contributed above the annual limit.

Value of the WI 529 Plan Tax Deduction:

Wisconsin residents trying to decide whether to use a WI 529 plan versus another state's Section 529 plan need to account for the potential tax savings of contributing to their in-state plan. Considering that the top Wisconsin income tax rate is 6.75%, each $3,000 contributed can save a taxpayer up to $202.50 at tax time.

Wisconsin does not currently offer a tax deduction to residents contributing to out-of-state plans or other types of college savings accounts such as a Coverdell Education Savings Account (ESA) or UTMA Custodial Account.

Claiming the WI 529 Plan Tax Deduction:

Residents can claim the Wisconsin 529 plan tax deduction on lines 11 of their Wisconsin Form 1.

The Wisconsin 529 Plan tax 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 WI 529 Plan tax deduction.

Reference and Documentation:

Additional information on the Wisconsin 529 plan tax deduction can be found in the Wisconsin Department of Revenue website and the official Wisconsin 529 Plan website.

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