North Carolina families who have 529 college savings plans won’t be able to take a tax deduction for contributions beginning next year. That’s part of a series of changes state lawmakers made to the tax code this year.
Like many states, North Carolina has offered a state tax deduction for the first $2,500 of contributions to the plan each year.
“It was not a lot of money, but it was a nice incentive and that is why we regret its going away,” says Ben Kittner with College Foundation of North Carolina which administers the plan.
The state began offering the deductions in 2006. Since then, the number of 529 savings accounts through the state has quadrupled. Kittner says the state added other funds during that time which accounted for part of that growth.
The state Department of Revenue says deductions for contributions to the savings plans cost the state about $6 million in 2011.