How much can I deduct for a Maryland 529 contribution?

Maryland lets each contributor deduct up to $2,500 per year per beneficiary from state taxable income. A married couple filing jointly who each contribute can deduct up to $5,000 per beneficiary. Contributions above the cap carry forward.

Does Maryland allow a carryforward of excess 529 contributions?

Yes. If you contribute more than the $2,500 annual cap per beneficiary, the excess can be carried forward and deducted in future tax years, generally for up to 10 years, subject to the same annual cap each year.

What is the actual dollar tax savings from the deduction?

The deduction reduces your Maryland taxable income, so your savings equal the deductible amount multiplied by your Maryland marginal tax rate. At a typical 5.75% state rate, a full $2,500 deduction saves about $144 in state tax. Local piggyback taxes can add more.

Do I get a deduction for the Maryland Prepaid College Trust too?

Yes. Both the Maryland College Investment Plan and the Maryland Prepaid College Trust qualify for the state income tax deduction, though the prepaid trust has its own rules on the deductible amount per contract year.

Is there a federal deduction for 529 contributions?

No. There is no federal income tax deduction for 529 contributions. The benefit at the federal level is tax-free growth and tax-free qualified withdrawals. The deduction modeled here is purely the Maryland state income tax benefit.

Maryland 529 Plan Tax Benefit Calculator

A Maryland 529 plan lets you deduct contributions from your Maryland state taxable income, up to a per-beneficiary cap, with excess amounts carrying forward to future years. This calculator estimates the immediate state tax savings from your contribution and shows how much rolls over.

How it works

Maryland grants an income subtraction of up to $2,500 per beneficiary per contributor for contributions to a Maryland College Investment Plan or Prepaid College Trust account. The deduction lowers your Maryland taxable income, so the dollar savings are:

savings = min(contribution, 2500 × accounts) × marginalRate

If you contribute more than the annual cap, the excess does not disappear. It carries forward and can be deducted in later years (generally up to 10), each year still capped at $2,500 per beneficiary:

deductibleThisYear = min(contribution, 2500 × accounts)
carryforward       = contribution − deductibleThisYear

Because Maryland also allows counties to levy a “piggyback” local income tax of roughly 2.25% to 3.20%, your combined marginal rate can exceed the headline state rate, which is why this tool lets you include a local rate.

Example

A married couple files jointly, funds one beneficiary, and contributes $7,000 in a year. Each spouse can deduct $2,500, so $5,000 is deductible this year and $2,000 carries forward. At a combined 5.75% state + 3.0% local rate (8.75%), the deduction saves about $437 in the first year, with the remaining $2,000 available to deduct next year.

Notes

The deduction is per contributor, so spouses filing jointly who each contribute can roughly double the benefit. The carryforward is per beneficiary and is still capped annually. This tool estimates only the Maryland state and local tax savings; it does not model tax-free investment growth. Always confirm current caps and carryforward rules with Maryland Form 502SU instructions.

Maryland 529 Plan Tax Benefit Calculator

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How it works

Example

Notes