This article updated from its original posting of 7/18/2022
New Jersey now allows a state income tax benefit to taxpayers who contribute to a NJ 529 plan as part of the New Jersey College Affordability Act.
- New Jersey Education Savings Trust (NJBEST) – Contributions to a NJBEST 529 could result in a state deduction up to $10,000. This deduction can amount to a maximum of $10,000 per taxpayer or $20,000 for a married couple filing jointly.
- New Jersey College Loans to Assist State Students (NJCLASS) – The amount of principal and interest paid on student loans under the NJCLASS could result in a deduction up to $2,500.
- Tuition paid for enrollment and attendance to a NJ institution of higher education – taxpayers can deduct up to $10,000 for tuition costs.
Also, up to $10,000 of the 529 plan may be used toward interest or principal of a beneficiary’s student loan.
The NJBEST 529 plan is an advantageous way to save for college. The plan allows funds within the accounts to grow tax-free and stay tax free as long as the money is used for qualified education expenses, such as tuition, room and board, and supplies.
In addition, New Jersey’s college affordability plan also offers a one-time grant for initial deposits into a new NJBEST 529 College Savings Plan. This grant will match the first contribution made by a New Jersey resident in a household with an annual income of $75,000 or less. NJBEST will match any initial contributions dollar-for-dollar, with a maximum of $750 contribution match.
Lastly, New Jersey also offers the NJBEST scholarship, where students attending a New Jersey College or university can obtain a tax-free scholarship of up to $3,000.