Maryland 529 tax deduction in 2026
Maryland counts the cap by giver and by child, then lets a large gift drain into later returns, and the county tax falls along with the state one.
Maryland tax saved on this contribution
$238
4.0 % of what you put in comes back on your 2026 return. Capped: only 5,000 dollars of the contribution count.
| Subtracted from state income | $5,000 |
| Your state marginal rate | 4.75 % |
| Cap that applies this year | $5,000 |
| Back per $1,000 contributed | $40 |
Maryland: Subtraction of up to $2,500 per contributor per beneficiary per year for Maryland College Investment Plan contributions (and $2,500 per Prepaid College Trust contract); a joint return reaches $5,000 per beneficiary only if each spouse contributes; not allowed in a year the account holder receives a State Contribution Program deposit. Read on 2026-10-19. No federal deduction exists for 529 contributions.
| Taxable income | Marginal rate | Tax saved |
|---|---|---|
| $50,000 | 4.75 % | $238 |
| $100,000 | 4.75 % | $238 |
| $200,000 | 5.25 % | $263 |
| $400,000 | 5.75 % | $288 |
Worked out by Radif Partners · How we calculate · Maryland rule read on October 19, 2026, brackets of tax year 2026 · not tax advice
Maryland lets each contributor subtract up to $2,500 a year per beneficiary for deposits to the Maryland College Investment Plan, and the same per contract for the Prepaid College Trust. A joint return reaches $5,000 per child only when both spouses contribute; with one contributing spouse it stays at $2,500. Anything above the limit carries forward for up to 10 years, which makes a lump sum fully usable over time. Because the subtraction lowers Maryland taxable net income, it reduces the county or Baltimore City income tax as well as the state tax. A couple at $175,000 who each give $2,500 to two children subtract $10,000 and save $500 in state tax at 5.00 %, or $800 with a 3 % local rate. Only Maryland's own plans count, and no subtraction is allowed in a year the account holder receives a State Contribution Program deposit.
| Benefit for contributions | Deduction |
|---|---|
| Cap | $2,500 single, $5,000 joint per child, per taxpayer (joint figure only if both spouses contribute or own accounts) |
| Another state’s plan counts | No, in-state plan only |
| Carryforward of the excess | 10 years |
| State plans (official names, no recommendation) | Maryland Senator Edward J. Kasemeyer College Investment Plan, Maryland Senator Edward J. Kasemeyer Prepaid College Trust |
| Account balance limit | $500,000 |
| K-12 withdrawals qualified for state tax | Yes |
| 529 to Roth IRA rollover qualified | No |
| Student loan payments qualified | Yes |
| Add-back on a rollover to another state’s plan | No |
Who gives matters as much as who receives
Administrative Release No. 32 of the Comptroller and the plan description set the subtraction per contributor and per beneficiary. A married couple filing jointly does not get $5,000 per child automatically: each spouse has to make a contribution. For the couple above, with two children and a county rate of 3 %, one contributing spouse means $5,000 subtracted and $400 saved; two contributing spouses double the room to $10,000 and the saving to $800. A grandparent who files in Maryland has a separate $2,500 per grandchild on their own return.
Maryland saving with county tax included
Maryland tax saved on this contribution
$800
| Subtracted from state income | $10,000 |
| Your state marginal rate | 5.00 % |
| Cap that applies this year | $10,000 |
| Back per $1,000 contributed | $80 |
The local rate box in the calculator is folded under the advanced fields; each county's rate, and the income tiers used by Anne Arundel and Frederick, are listed in the Comptroller's resident booklet.
10 years to use a large deposit
Contributions above $2,500 for a beneficiary are not wasted: the excess can be subtracted over the following 10 years, according to the plan's tax page and Release No. 32. A grandmother at $120,000 who deposits $20,000 for one grandchild subtracts $2,500 this year and saves $200 with a 3 % county rate; the rest is used up over about 8 returns in all. A bill in the 2025 session (SB 412) to raise the cap from tax year 2026 was not enacted, so the figure stays at $2,500.
The year a State Contribution arrives
Maryland also has a State Contribution Program that adds money to some accounts. The resident booklet says no subtraction is allowed for the year in which the account holder receives such a deposit. A family expecting one should count on no subtraction for that year's contributions.
What leaves the plan, and what comes back
Prior subtractions are added back to Maryland income in the year of any distribution that is neither a rollover distribution, to another qualified tuition program or an ABLE account for the beneficiary or a relative, nor spent on qualified education expenses. The plan description says this applies even when the money comes out because of a scholarship, death or disability, which is stricter than the federal penalty rules. Loan payments for a sibling of the beneficiary also count as nonqualified for Maryland.
Three points rest on the plan description only. K-12 costs up to $20,000 from 2026 and credential expenses are listed as free of Maryland tax, while the Comptroller's booklet still speaks of higher education expenses. A rollover to another state's plan appears exempt from the add-back as a rollover distribution, a reading the Comptroller has not stated. The 529 to Roth IRA rollover paragraph points to the add-back section, which suggests Maryland would recapture, but no Comptroller text names it, so the case is not settled.
Maryland add-back on a nonqualified withdrawal
Maryland tax if the deductions come back
$0
| Amount added back | $0 |
| Your state marginal rate | 5.00 % |
Accounts for one beneficiary can receive contributions until they reach $500,000. The superfunding page covers the gift tax side of a large deposit.