Save for Higher Education and Career Training with the Wisconsin 529 College Savings Program and New Tax Enhancements

published May 1, 2024

MADISON, Wis. – The Wisconsin Department of Financial Institutions (DFI) today encouraged Wisconsinites to save for higher education and career training with the Wisconsin 529 College Savings Program and the program’s new tax enhancements enacted by Gov. Tony Evers on March 21, 2024. The legislation, Assembly Bill 793, now 2023 Wisconsin Act 148, modified the individual income tax treatment for contributions to – and withdrawals from – a Wisconsin 529 college savings account, as well as the maximum tax credit an employer contributing to an employee’s Wisconsin 529 college savings account may claim.

"The Wisconsin 529 College Savings Program is a longstanding and trusted resource that has helped transform the lives of tens of thousands of Wisconsinites," said Gov. Evers. "These tax enhancements make saving for higher education and career training more appealing to families and employers, helping to ensure a well-educated and well-trained Wisconsin workforce in the future."

The legislation, passed unanimously by the Wisconsin State Assembly and Wisconsin State Senate, modified the Wisconsin 529 College Savings Program and its two 529 college savings plans – Edvest 529 (direct-sold) and Tomorrow's Scholar (advisor-sold) – beginning with the 2024 tax year. For single filers or married couples filing a joint return, tax-deductible amounts increased to $5,000 annually per beneficiary. For married couples filing separately, tax-deductible amounts increased to $2,500 annually per beneficiary. Tax-deductible amounts are adjusted annually for inflation. Additionally, the legislation removed the tax-deductible limitation for divorced parents.

"Saving with a 529 college savings plan remains one of the most popular ways for families to save for higher education and career training, in large part due to their tax-advantages, but additionally, because more students are finding value in them as the federal definition of qualified higher education expense continues to expand," said DFI Secretary Cheryll Olson-Collins. "In recent years, qualified higher education expenses have expanded to include tuition expenses for elementary and secondary schools, expenses for registered apprenticeship programs, and qualified education loan repayments."

While Wisconsin taxpayers may currently use their Wisconsin 529 account savings for each of these expanded definitions, this legislation specifies that Wisconsin's 529 college savings plans conform to the federal definition of "qualified higher education expense." This ensures that any future expansion to the federal definition of "qualified higher education expense" will be automatically adopted in Wisconsin.

The legislation also increased and streamlined the tax credit that may be claimed by a Wisconsin employer, including a sole proprietor, making contributions to an employee's Edvest 529 or Tomorrow's Scholar account. The maximum credit per employee increased to 50 percent of the amount the employer contributes to the 529 account, not exceeding a maximum credit of $800, which is adjusted annually for inflation.

"Continually enhancing and strengthening the Wisconsin 529 College Savings Program and its two 529 college savings plans is important to us," said DFI Secretary Olson-Collins. "Creating more options for families to use their Wisconsin 529 savings tax-free, increasing tax-deductible amounts, and making it more compelling for employers to help their employees save for a loved one’s higher education, show that Wisconsin is keeping up with the increasing cost of tuition and the desires of students to explore all post-secondary education and career training pathways," Olson-Collins added.

Wisconsin taxpayers have until the tax filing deadline each year to make contributions to their Wisconsin 529 account. Contributions in excess of the current tax year's maximum tax-deductible amount may carryover one or more years and be deducted on future taxes, up to that year's annual maximum deductible amount. Taxpayers should be aware that the Wisconsin 529 College Savings Program requires the use of a "first-in, first-out" method of accounting, meaning any withdrawals taken from a 529 account within 365 days of being contributed must be added back to the filer's taxable income for state tax purposes. The new legislation clarifies that this practice also applies to carryover amounts withdrawn within 365 days of first being contributed.

For additional information, visit DFI's Wisconsin 529 College Savings Program webpage. To open an Edvest 529 account, visit Edvest.com. To work with a financial advisor to open and manage a Tomorrow's Scholar account, visit 529wi.voya.com.

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Media Contact Email: DFICommunications@dfi.wisconsin.gov