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AZ Tax Incentives

This tax incentive provides a State of Arizona income tax deduction for contributions made to any state’s 529 plan. The incentive adds to the ongoing tax benefits of a 529 plan where assets grow tax-deferred and withdrawals are tax-free when funds are used for qualified education expenses. Pursuant to Laws 2021, Chapter 395, effective September 29, 2021:

  • Married couples can subtract up to $4,000 per beneficiary when filing jointly.
  • Single individuals or heads of household may subtract up to $2,000 per beneficiary.

Families should consider their own state’s 529 plan before investing in another state’s plan. By considering in-state incentives, families may find that they more closely meet their education saving goals. Families are urged to consult their tax advisor when making an education savings decision. Contact the Arizona Department of Revenue Taxpayer Information and Assistance Section at (602) 255-3381 with questions.

Arizona Laws 2021, Chapter 395, Sec. 1. 43-1022 (Effective September 29, 2021)

20. The amount contributed during the taxable year to college savings plans established pursuant to section 529 of the internal revenue code on behalf of the designated beneficiary to the extent that the contributions were not deducted in computing federal adjusted gross income.  The amount subtracted may not exceed:

(a) $2,000 per beneficiary for a single individual or a head of household.

(b) $4,000 per beneficiary for a married couple filing a joint return. In the case of a husband and wife who file separate returns, the subtraction may be taken by either taxpayer or may be divided between them, but the total subtractions allowed both husband and wife may not exceed $4,000 per beneficiary.

Arizona’s Education Savings Plan is not insured by the State of Arizona or any of the program providers. Neither the principal deposited nor the investment return is guaranteed by the State of Arizona or the program providers.

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