If you contributed 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 529 plan?
Its main purpose is to help families contend with the future high costs of their children’s or grandchildren’s college or vocational education
What are the qualifications?
Assets from 529 plans may be used at any eligible school, including two- and four-year colleges, graduate schools and vocational and technical schools. Funds may be used for tuition, fees, certain room and board costs, and required computers and course-related software.
What are the limits?
Single contributors - $15,000
Married contributors - $30,000
What about carryovers?
Rollovers from another state’s 529 plan into VHEIP are also eligible for the tax credit on the contributions portion of the rollover (not on the earnings portion). The funds must remain in VHEIP for the remainder of the tax year in order to claim the tax credit.
What if I don’t use it for education expenses?
Earnings portion of the withdrawal, plus a 10% penalty, and you must repay any Vermont state tax credit that was given for the contributions portion of the non-qualified withdrawal.
Where to Enter?
- State Section
- VT IN-119 Tax Credits
- VT Higher Education Investment
For more information: