Division of TaxationFor Tax Year 2022 and forward, The ³Ô¹ÏºÚÁÏ College Affordability Act allows for three Income Tax deductions for those who file tax returns showing gross income of $200,000 or less. Deductions include contributions to an NJBEST 529 savings plan, payments made for an NJCLASS student loan, and tuition costs for ³Ô¹ÏºÚÁÏ colleges and universities.
Prior to Tax Year 2022, contributions to 529 plans were not deductible, but the money grew tax-free if used for qualified educational expenses. A rollover from one account to another was considered a qualified distribution within the meaning of N.J.S.A. 54A:6-25 as long as it met the requirement in section 529(c)(3)(C)(i) of the Internal Revenue Code.
You can deduct up to $10,000 of contributions made during the year into an account.
Example: You contribute $1,000 per month, beginning in January. If your gross income is $200,000 or less, you can deduct the maximum amount of $10,000.
The may offer additional NJBEST 529 College Savings Plan benefits to ³Ô¹ÏºÚÁÏ residents.
You can deduct up to $2,500 of principal and interest paid on student loans during the year under if your gross income is $200,000 or less.
If you, your spouse, or your dependent enroll in and attend a ³Ô¹ÏºÚÁÏ institution of higher education, you can deduct up to $10,000 for tuition costs.