A gift for your kids. A 2021 VT tax credit for you.

Written by
Stephen Mease

Date
December 20, 2021

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529b_float.jpgWith Vermont’s state-sponsored 529 savings plan, you can give a gift that lasts far beyond the holiday season. VSAC encourages families to look ahead, and plan for their kids’ (or grandkids’) future possibilities, with a gift of education savings. Whatever the age of your loved one, whether an infant or a teen—or even in high school or college—you can benefit now from federal and state tax advantages for 529 contributions and savings: Deposits made into a VT529 account by December 31 qualify for a 10% Vermont state income tax credit for 2021.

“College savings accounts are a powerful tool,” said Scott Giles, president and CEO of the Vermont Student Assistance Corp., the state-appointed administrator of Vermont’s official 529 savings program, the Vermont Higher Education Investment Plan, also known as VT529. “Education is one of the most important investments a student can make. That’s why we want to encourage families to save for college and other career training. Vermont’s 529 savings plan is a great place to start.”

Saving for college or training, even in small amounts, can help your kids (and grandkids) get ready for tomorrow’s opportunities, no matter what path they want to explore. Studies show that students with even small amounts of savings are three times more likely to pursue education after high school and four times more likely to complete that training. Which means they’ll be more prepared with the degree or credentials they need for the jobs of the future.

Maximize your 2021 Vermont tax credit.

Named after Section 529 of the Internal Revenue Code, 529 plans help families set aside funds for future college or training costs, with federal and state tax advantages to help make saving easier. Because 529 accounts can be opened with just $25, they’re accessible for families at most income levels, and the savings can grow tax-free.

Vermont’s official state-sponsored 529 savings plan, established in 1999, is the only savings program that qualifies Vermont taxpayers for a Vermont state income tax credit on annual contributions for education after high school. Deposits made into a VT529 account by December 31 qualify for a 10% tax credit on contributions up to $2,500 per beneficiary per year ($5,000 if filing jointly) for 2021. That’s a Vermont tax credit of up to $250 (or $500 for joint taxpayers), per beneficiary per year.

529 funds can be used to pay for tuition, room and board (both on and off campus), books, and many other costs of college or training, including apprenticeships and credential programs. The funds are viewed favorably for financial aid, and there’s no age or time limit: 529 plans can be used for graduate or adult education, too.

To explain more about 529 savings plans, we recorded VSAC Shows You How webinar earlier this fall, focusing specifically how and why to set up a 529 plan. Watch the full recorded video.

Last-minute gifts? Friends and family can give, too.

With VSAC’s Gift of College gift card, it’s easy to give (or ask for) the gift of education opportunity. They’re available at Vermont locations of Cumberland Farms and Kinney Drugs stores, making it convenient to pick up a local card for the loved ones on your holiday lists. Learn more about purchasing or redeeming a VSAC Gift of College gift card here.

Family and friends can also contribute to an existing VT529 account to give a gift of any amount or open a VT529 account with as little as $25. For more on saving and gifting with VT529, visit vsac.org/save.