The family would gain another $1 because the $3.38 earned wasn't taxed federally like it would have been if it was earned on a savings account outside of a 529 plan. Then for Utah taxpayers, the state income tax credit for USEP accounts adds another $60 (5 percent). The result is $64.38 earned instead of $3.38 for that year.
"The No. 1 reason I invested in a 529 plan is that I can write off up to $4,000," says Bennett, the Virginia parent. "It was an immediate tax advantage."
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