Why doesn't California have an in-state tax benefit for 529 contributions like other states?

Question

Who do we need to call to get California to have the same in-state tax deduction for contribution as many other states?

Answer 1

I believe the treasure's office is ultimately in charge of the 529. Try going on-line at the CA state web page and look for information on the scholarshare investment board. You also might want to contact Fidelity who is running the program currently. They may be able to tell you who to call or write. They'd probably love to see a tax deduction as it would encourage more people to invest in the program.

Answer 2

Good question. Talk to your state legislator about it.

Same thing here in Mass, where the state doesn't offer a tax break for contributions on its in-state 529 plans. However, when it's time to withdraw, because it's likely that the earnings will be free from federal income tax, the state will follow suit and not tax the earnings as income, either.

In a sense, not having an in-state tax benefit for contributions is not a bad thing, since it frees you to sign up w/ any 529 plan in terms of the brokerage house or bank of your choice. I've got money in NY's Upromise plan because Vanguard runs it.