If you contributed to a New York 529 College Savings Program during the tax year, you may qualify for a New York income tax deduction. If you took money out of a 529 account, you may also need to report the withdrawal on your New York return if it wasn't used for qualified education expenses.
What Is a New York 529 Plan?
New York's 529 College Savings Program is designed to help families save for future education expenses. The plan offers tax advantages and can be used for a variety of educational costs, including college, graduate school, vocational training, and certain K-12 education expenses.
The program is intended to make it easier to prepare for the rising cost of education while potentially providing a New York tax benefit.
What Expenses Qualify?
Qualified education expenses generally include:
- Tuition and mandatory fees
- Books and supplies
- Required equipment
- Computers, software, internet access, and related technology used primarily by the beneficiary while enrolled in school
- Certain room and board expenses for students enrolled at least half-time
- Certain expenses for students with special needs
- K-12 tuition expenses of up to $10,000 per year per beneficiary
Qualified withdrawals used for these expenses generally are not subject to additional New York tax adjustments.
What Are the New York 529 Deduction Limits?
New York allows a deduction for contributions made to a New York 529 account.
For tax year 2026, the deduction is limited to:
- $5,000 for Single, Head of Household, Married Filing Separately, and Qualifying Surviving Spouse filers
- $10,000 for Married Filing Jointly filers
New York's 2026 Form IT-201 instructions continue to provide these contribution limit for the New York 529 College Savings Program deduction.
What Are the Contribution Limits?
The lifetime contribution limit for a beneficiary under New York's 529 College Savings Program is:
- $520,000 per beneficiary
Keep in mind that this is a program limit, not an annual deduction limit.
What bout Rollovers?
You may perform a tax-free rollover for the same beneficiary once every 12 months.
Rollovers can generally be completed in one of two ways:
Direct Rollover
Funds are transferred directly from one 529 plan administrator to another without the account owner receiving the money.
Indirect Rollover
You receive the funds and must redeposit them into a qualifying 529 account within 60 days.
If completed correctly, these rollovers are generally not taxable.
What Happens if I Use the Money for Non-Educational Expenses?
If you take a nonqualified withdrawal, the earnings portion may be subject to:
- Federal income tax
- A 10% federal penalty tax
- State and local income taxes
- Possible New York income adjustments
New York requires certain nonqualified withdrawals from its 529 program to be added back to income. New York's instructions identify transfers to another state's 529 plan and certain withdrawals not used for qualified higher education expenses as examples of nonqualified withdrawals.
What Schools Can a 529 Plan Be Used For?
Funds may generally be used at eligible educational institutions, including:
- Postsecondary trade schools
- Vocational schools
- Two-year colleges
- Four-year colleges and universities
- Graduate and postgraduate programs
As long as the institution qualifies under federal education guidelines, 529 funds can generally be used for qualified expenses.
How Do I Report New York 529 Contributions in the Program?
To claim the New York 529 deduction:
- Select State Section
- Edit New York Return (Click the 3 dots)
- Select Subtractions From Income
- Enter the amount contributed to an account established under the New York 529 College Savings Program
New York reports this deduction as a subtraction from income. The 2026 instructions allow qualifying account owners to deduct up to $5,000 ($10,000 for joint filers) for contributions made to New York's 529 College Savings Program.
Can I Apply My New York Refund to a 529 Plan?
New York allows taxpayers to deposit all or part of their state refund directly into a New York 529 account using Form IT-195, Allocation of Refund.
To apply a refund to a 529 account:
- Select State Section
- Edit New York Return (Click the 3 dots)
- Select Payments
- Choose Apply Portion of Refund to Your NYS 529 College Savings Account (IT-195)
New York allows deposits into designated New York 529 accounts through Form IT-195 and permits taxpayers to allocate their refund among up to three New York 529 accounts.
Important Information
- Contributions to a New York 529 plan may qualify for New York income tax deduction.
- The maximum deduction is generally $5,000 for most filers or $10,000 for Married Filing Jointly.
- Nonqualified withdrawals may require an addition to New York income.
- Qualified education expenses include many college, vocational school, and certain K-12 expenses.
- New York allows taxpayers to direct all or part of their state refund into a New York 529 account through Form IT-195.
Additional Information
Before entering a 529 deduction or reporting a withdrawal, review your year-end account statements and any tax forms received from the plan administrator. Accurate reporting helps ensure you receive any available deduction and avoid unexpected tax adjustments related to nonqualified withdrawals.