Tax Credit for Employer Contributions to Employee 529 Qualified State Tuition Program

For income tax years commencing on or after January 1, 2019, but prior to January 1, 2022, an employer may claim an income tax credit for any contribution of money the employer makes during the income tax year to a 529 qualified state tuition program account established by CollegeInvest and owned by an employee. An employee is any person in the employment of an employer for a salary or for hourly wages, whether full-time or part-time and whether temporary or permanent. The credit is allowed regardless of the named beneficiary of the account.

The amount of the credit is equal to twenty percent of the contribution, except that the maximum total credit an employer may claim for each employee in a taxable year is five hundred dollars. If the amount of the credit allowed exceeds the amount of income tax otherwise due for the employer for the tax year, the excess credit may be carried forward to the next tax year. The credit must be applied first to the earliest income tax years possible and may not be carried forward for more than three tax years.    

For more information, visit CollegeInvest.org and review the Employer Contributions to Employee 529 Qualified State Tuition Program Form (DR 0289) on the Income Tax Credit Forms web page.