STATE TAX INCENTIVE BILL PASSES!
Arizona Votes to Support Our Children’s Higher Education
(Phoenix, AZ) July 17, 2007 – The Arizona Legislature in the 2007 legislative session passed a new incentive offering a tax deduction to Arizona taxpayers contributing to a 529 college savings plan. It was signed by the Governor last week. What does this mean for Arizona families?
The bill, revived by Speaker of the Arizona House of Representatives, James Weiers, offers an income tax deduction to Arizonans who contribute to a 529 college savings plan. This allows contributions to a 529 plan to be deducted annually from Arizona State Income Taxes. Eligible individuals who are single and/or designated
as ‘head of household’ can deduct up to $750 annually while married individuals filing jointly can deduct up to $1,500 annual deduction. Arizona families can begin taking advantage of this starting January 1, 2008.
This new state tax incentive now allows Arizona residents using a 529 plan to save taxes in two ways. First, 529 plans assets grow tax-deferred and withdrawals are federal and Arizona State Income tax-free when funds are used for qualified higher education expenses. This incentive became a permanent with the passing of the
Pension Protection Plan of 2006. Second, the new incentive gives families a tax benefit on the front-end when they make contributions to a 529 Plan.
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