Tax Savings Are at Your Fingertips With a 529 Plan


Tax Savings Are at Your Fingertips With a 529 Plan


- min read

Layout canvas

With tax season in full swing, many Americans are planning to take advantage of every deduction and exemption available. A 529 plan with The Education Plan® can help you save on your taxes and help you save for future education at the same time. Let us walk you through the tax savings and benefits.

An Opportunity for a Range of Tax Savings

A 529 plan is a tax-advantaged education savings plan that can be used to pay for a wide range of qualified education expenses for your child or loved one, including tuition, room and board, books, computers, and more. Money invested in a 529 plan can be used at any accredited college or university, trade, or professional school. Funds can also be used to pay for K–12 tuition, apprenticeship programs, and student loan repayment.

Apart from being a flexible savings account that helps you save for a loved one’s future education; a 529 plan offers a wide range of tax benefits including:

  • Tax-advantaged growth: Earnings on a 529 account are not subject to federal taxes when used for qualified education expenses. This means that you will pay no federal income tax on earnings as your account grows over the years.
  • State tax incentives: Many states offer additional tax benefits, either in terms of a tax deduction or a credit for contributions into a 529 account. In New Mexico, any contribution to your 529 account with The Education Plan is eligible for deduction from your New Mexico state taxable income each year.
  • Gift tax benefits: A contribution to a 529 plan is considered a completed gift from the contributor to the beneficiary for gift tax purposes. In 2024, the first $18,000 ($36,000 for a married couple filing jointly) given to each beneficiary (annual basis) is excluded from federal gift taxes. A special provision in the IRS code allows for five-year accelerated gifting to a 529 plan. This means you can contribute up to $90,000 for a single contributor (or $180,000 for married couples) in 2024 and apply it against the annual gift tax exclusion equally over a five-year period. This can be a beneficial estate planning tool. We recommend consulting with a tax advisor about gift taxes and your specific situation before investing.
  • Tax-free withdrawals: Withdrawals from a 529 account are tax free as long as they are used for qualified education expenses.

Your Tax Refund: Multiply the Savings

For the 2022 tax year, the IRS estimated that the average refund was $3,121. Many families see a sizeable tax refund as an opportunity to make a single large purchase or fund a vacation. This year, instead of spending your refund, consider investing it in a 529 education savings account with The Education Plan. The benefits can pay off for years to come.

  • Boost your savings with a lump-sum payment.
  • If you’re a New Mexico taxpayer, the amount you contributed in 2023 is deductible on your state income tax return for that year, multiplying your savings.
  • Earnings on your contribution will be tax-free, and withdrawals will be tax free as long as they are used for qualified education expenses.

It’s Never Too Late to Get Started

When you save for future education with a 529 account with The Education Plan, it not only helps you prepare for future education expenses, but also offers significant tax benefits. Ready to get started? You can open an account in about 15 minutes with no initial minimum contribution required.


Recent Articles

A College Savings
Award Program

The deadline to apply for the Saving for Success Award is December 21, 2022.


Ready to get started?
We can help!




The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

Privacy & Cookie Policy

Phone: 1-877-337-5268
We're available Monday to Friday 8 a.m. to 7 p.m. MT


For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

Ugift is a registered service mark of Ascensus Broker Dealer Services, LLC.

The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

All other marks are the exclusive property of their respective owners.

Not FDIC-Insured. No Bank, State or Federal Guarantee. May Lose Value.