When you pay fewer taxes, you can earn more and grow your account faster — giving your child or grandchild an even bigger head start.

Federal Income Tax Benefits

As a 529 Plan, MESP offers unsurpassed income tax benefits. Although contributions are not deductible on your federal tax return, any investment earnings can grow tax-deferred, and distributions to pay for the beneficiary’s college costs come out federally tax-free.

State Income Tax Information

In addition to federal tax benefits, there are state tax benefits as well. For MESP, tax treatment is as follows:

Contributions are deductible for Michigan income tax purposes up to $5,000 per year for a single income tax return filer and $10,000 per year for joint filers. Incoming rollovers from another 529 account, however, are not eligible for the tax deduction.

Qualified Withdrawals, certain outgoing rollovers, and certain federally Taxable Withdrawals are not subject to Michigan income tax for either the account owner or the beneficiary. Michigan tax benefits related to the MESP are available only to Michigan tax payers. You should talk to a qualified advisor about how Michigan tax provisions affect your circumstances.