Tax Advantages

With an Arkansas Brighter Future 529 Plan account, your savings has the potential to grow at a faster rate than if you invested in a comparable taxable account. The plan offers several tax advantages that can help you save more for education, including:

Arkansas Taxpayer Deduction

Arkansas taxpayers may be eligible to deduct up to $5,000 (up to $10,000 for married couples making a proper election) in Arkansas Brighter Future 529 Plan contributions from their Arkansas adjusted gross income calculation on their Arkansas state income taxes.1

Qualified Tax-Free Withdrawals

Withdrawals for qualified expenses are exempt from federal and state tax.2

Gift-Tax Advantages

Contribute up to $16,000 per beneficiary annually ($32,000 for married couples making a proper election) with no gift-tax consequence.

Estate Planning Benefits

Contribute up to $80,000 per designated beneficiary in a single year (up to $160,000 for married couples) by taking advantage of five years’ worth of federal tax-free gifts at one time.3

Carry Forward Advantages

Arkansas taxpayers who contribute more than $5,000 (more than $10,000 for married couples making a proper election) to the plan in one tax year may carry forward those additional funds to the next succeeding four (4) tax years.

Additional Taxpayer Advantages

Contributions up to $3,000 per Arkansas taxpayer ($6,000 for married couples making a proper election) to a tax-deferred tuition savings program established by another state are deductible per year; provided that the taxpayer has not deducted the contribution on another state’s income tax return.

Rollover Contribution Benefits

The State of Arkansas offers 529 plan contributors a one-time state tax deduction of $7,500 when they roll their out-of-state 529 plan into an Arkansas Brighter Future 529 Plan.

Arkansas Business Advantages

Arkansas employers can receive a business tax deduction of up to $500 per each employee match into an Arkansas Brighter Future 529 Plan account.

1Arkansas taxpayers can deduct up to $5,000 (up to $10,000 for married couples making a proper election) of your Arkansas Brighter Future Direct Plan contributions from your Arkansas adjusted gross income with any unused excess contribution in a tax year being carried over to the next succeeding four tax years, beginning January 1, 2017.
2Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes and recapture of AR tax deductions. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes.
3In the event the contributor does not survive the five-year period, a pro-rated amount will revert to the contributor’s taxable estate.