If you made a contribution to the 529 plan, you will be able to claim a subtraction from income. If you withdrew money from your 529 plan, you may have to add the withdrawal back to your income if it was not used for educational purposes.
What is the Arkansas 529 plan?
Arkansas offers the GIFT College Investing Plan
Contributions to the Plan in a tax year are deductible from Arkansas state income tax, subject to recapture in subsequent years in which a non-qualified withdrawal or a rollover out to another state's 529 plan is made.
What are the qualifications?
All U.S. citizens and resident aliens 18 or older with a physical address within the United States or Puerto Rico can open an account for anyone they would like to help save for college. There are no state residency requirements or income limits on participation.
What are the deduction limits?
For single filers : $5,000 per year
For joint filers : $10,000 per year
What about rollovers?
Rollovers before January 1, 2026 from an Arkansas 529 GIFT Plan account into an ABLE account for the same designated beneficiary (or to another beneficiary who is a Member of the Family) will not be subject to federal income tax, Arkansas state income tax, or the annual contribution limits for ABLE accounts.
Arkansas offers plan contributors a one-time state tax deduction of $7,500 when they roll their out-of-state 529 plan into an Arkansas Brighter Future 529 Plan.
What if I don’t use it for education expenses?
If you withdraw money from an Arkansas 529 Plan and do not use it towards qualified education expenses, you will be taxed on the earnings portion of your balance along with a 10% penalty.
You can deduct contributions made to these plans by doing the following:
- State Section
- Edit Arkansas state return
- Subtractions from Income
- Miscellaneous Subtractions
- Tax Deferred Tuition Savings Program