Tax time is VT529 time! Don’t forget to claim your Vermont education savings tax credit

If you are saving for college and training for your kids, your grandkids, or yourself: Don’t forget to take your Vermont Higher Education Investment Plan/VT529 credit when you fill out your 2023 taxes!

VHEIP, also called VT529, is Vermont’s official 529 college savings plan, administered by VSAC to help families more easily save for future education. The VT529 plan is the only program that qualifies for a nonrefundable tax credit to Vermont taxpayers. 

The VT529 plan is designed to help families more easily set aside funds for future college or education training. The 529 plans are named after Section 529 of the IRS code, which created these savings plans in 1996. Most 529 plans are operated by state agencies.

Since 1999, over $363 million in VT529 funds have been used to help more than 12,500 students cover qualified expenses for education past high school. 

What is the VT529 tax credit?

Vermont taxpayers who contributed to a VT529 account by December 31 of the past tax year can receive:

• A 10% state income tax credit of the first $2,500 contributed into a VT529 account per beneficiary, per tax year (or, in the case of a married couple filing jointly, 10% of the first $5,000 contributed per beneficiary per year). That’s a tax credit worth up to $250 per beneficiary (or $500 per beneficiary for joint returns). 

  Gifts made by a Vermont taxpayer into any VT529 account are also eligible for the credit. So if you're a Vermont taxpayer, filing jointly, and contributed for two children (or two grandchildren) during the past year, you could get a $1,000 tax credit off your VT income tax bill for 2023. 

  • Tip: You won’t get a tax statement from VT529 unless you drew upon the funds in the tax year 2023. However, you can still verify contributions by downloading an account statement from your VT529 portal.
• Rollovers from another state’s 529 plan into VT529 are also eligible for the tax credit on the contributions portion of the rollover. The funds must remain in the VT529 plan for the remainder of the tax year to claim the credit.

Claiming your VT tax credit is simple. Consult the Vermont Official State Website for forms, and for details and examples, including information on nonqualified withdrawals, see the Vermont Department of Taxes Technical Bulletin (TB-66). If you have specific questions about how the income tax advantages apply to your household, you may also want to chat with your tax preparer.

Plan for your 2024 credits: Put your 2023 refund to work for you!

Wondering what to do with that 2023 tax refund? Why not add it to your VT529 account for 2024? If you don’t have a Vermont 529 savings plan account, open one now to get the Vermont income tax credit on contributions you make in 2024. VT529 accounts can be started with as little as $25, or just $15 via payroll deductions. Education is for everybody, and VT529 offers affordable options for families at most income levels.

VT529 helps you save for tomorrow's dreams

Why save with VT529? Vermonters will need some form of education or training after high school to be ready for the evolving job market. Research shows that students from families who save even a small amount for education are three times more likely to attend college or training and four times more likely to complete their education.

That initial investment continues for a lifetime. Students who pursue higher training experience greater earnings, higher job satisfaction, and a healthier lifestyle than individuals without education past high school. Read more about the value of education.

Flexible options & easy to use

A 529 account is flexible: When you fund a VT529 account, you can choose, and change, your investment strategy. VT529 offers six investment portfolios to choose from (most families select the age-based plan, to match their children’s needs as they grow). Whichever option you initially choose, you can always change your allocations as your financial strategy changes.

When it’s time to use your VT529 funds, the list of qualified education-related expenses includes a lot more than just four-year college tuition. VT529 funds can be used for

• apprenticeships
• certifications
• trade & vocational programs
• college and grad school

Many people don’t realize that 529 accounts can be used to pay for: 

• food
• on- or off-campus housing costs
• computers
• books
• other educational equipment
• and even student loan payments

There's no age or time limit on when your savings are used.

If your intended beneficiary decides not to use the savings, you can transfer the funds to a different beneficiary.

Learn more about the benefits of saving for (and gifting) education opportunities with VT529. You can also call 800-637-5860.