Skip to main content

Tax Benefits

It’s a win-win. Save on taxes and save for education. 

Some of the biggest benefits of saving for college with The Education Plan® are the tax advantages.

Ready to get started?

We can help!

Federal tax advantages

The account owner won’t pay federal taxes on earnings and the account can grow tax-free. In addition, you can withdraw the money tax free, as long as it’s used to pay for qualified education expenses. 

It pays to live in New Mexico

The Education Plan is a 529 college savings plan sponsored by the State of New Mexico. New Mexico taxpayers enjoy additional state tax benefits by saving with The Education Plan:

  • Contributions to The Education Plan for post-secondary education are deductible from New Mexico state taxable income.
  • Any earnings grow tax-free from New Mexico state income tax.
  • Qualified withdrawals are exempt from New Mexico state income tax.
  • See recent federal tax changes and your 529

Some states provide favorable tax treatment to their residents only if they invest in the state’s own plan. Investors should consider before investing whether their home state offers any state tax or other benefits that are only available for investments in the state’s qualified tuition program.

1 The Plan is neither FDIC insured nor guaranteed and may lose value.
2 When withdrawals are used for other purposes, the earnings portion of the withdrawal is subject to federal income taxes and any applicable state income tax, as well as an additional 10% federal tax and the recapture of all previous New Mexico tax deductions taken for contributions to an account.