Minnesota 529 tax credit in 2026
Two benefits sit side by side on the Minnesota return, and each family takes only the one that pays more.
Minnesota tax saved on this contribution
$284
4.7 % of what you put in comes back on your 2026 return. Capped: only 568 dollars of the contribution count.
| Credit on your state return | $284 |
| Your state marginal rate | 6.80 % |
| Cap that applies this year | $568 |
| Back per $1,000 contributed | $47 |
Minnesota: Residents choose either a subtraction of net contributions to any section 529 account (max $1,500, or $3,000 on a joint return) or a nonrefundable credit of 50 % of net contributions up to $500, phased out by federal AGI; contributions are net of the year's withdrawals and exclude rollovers. Read on 2026-10-19. No federal deduction exists for 529 contributions.
| Taxable income | Marginal rate | Tax saved |
|---|---|---|
| $50,000 | 6.80 % | $500 |
| $100,000 | 6.80 % | $484 |
| $200,000 | 7.85 % | $236 |
| $400,000 | 9.85 % | $296 |
Worked out by Radif Partners · How we calculate · Minnesota rule read on October 19, 2026, brackets of tax year 2026 · not tax advice
Minnesota lets a resident pick, each year, between a credit and a subtraction for contributions to any section 529 account, not only the Minnesota College Savings Plan. The credit is 50 % of net contributions, at most $500, and it shrinks with federal adjusted gross income (AGI) above $98,410 until it reaches zero at $123,410 single or $202,140 joint. The subtraction takes up to $1,500, or $3,000 on a joint return, off Minnesota taxable income and has no income limit, so it is the one left once the credit is gone. A couple at $88,000 who put in $1,000 gets $500 back through the credit; a couple at $245,000 who put in $3,000 saves $236 through the subtraction. Contributions count net of the year's withdrawals and exclude rollovers. K-12 tuition, credentialing, loan repayments and Roth rollovers bring Minnesota tax back.
| Benefit for contributions | Credit or deduction |
|---|---|
| Cap | $1,500 single, $3,000 joint per return |
| Credit rate | 50 % |
| Largest credit | $500 single, $500 joint |
| Credit by income | single up to $98,410: 50 %, max $500; single up to $123,410: 50 %, max $500 less 2 % of income above $98,410; joint up to $98,410: 50 %, max $500; joint up to $123,410: 50 %, max $500 less 1 % of income above $98,410, not below $250; joint up to $177,140: 50 %, max $250; joint up to $202,140: 50 %, max $250 less 1 % of income above $177,140 |
| Income limit | $123,410 single, $202,140 joint (federal adjusted gross income) |
| Another state’s plan counts | Yes (tax parity) |
| State plans (official names, no recommendation) | Minnesota College Savings Plan |
| Account balance limit | $525,000 |
| K-12 withdrawals qualified for state tax | No |
| 529 to Roth IRA rollover qualified | No |
| Student loan payments qualified | No |
| Add-back on a rollover to another state’s plan | No |
Credit or subtraction: the choice Minnesota leaves to the family
Few states offer two routes. Minnesota does, and the statute lets a filer claim one or the other for the year, never both. The credit (Minn. Stat. 290.0684) is worth half of what goes in, so the first $1,000 of net contributions already reaches the $500 ceiling. The subtraction (Minn. Stat. 290.0132) lowers taxable income by the amount contributed, up to $3,000 joint, and its value is that amount times the bracket the family sits in. With brackets running from 5.35 % to 9.85 %, the full subtraction is worth at most $296 to a couple, which is why the credit wins wherever it is still fully available.
Being nonrefundable, the credit can only reduce tax owed; it never becomes a payment on its own. Both routes work for any state's 529, so the choice of plan does not change the Minnesota answer.
Credit or subtraction for your Minnesota return
Minnesota tax saved on this contribution
$500
| Credit on your state return | $500 |
| Your state marginal rate | 6.80 % |
| Cap that applies this year | $1,000 |
| Back per $1,000 contributed | $500 |
How the phase-out walks down
The 2026 thresholds come from the Department of Revenue's inflation-adjusted amounts. For a single filer, the $500 maximum loses 2 % of every dollar of AGI above $98,410 and is gone at $123,410. A joint return falls more slowly: 1 % per dollar above $98,410, stopping at a $250 plateau that holds until $177,140, then sliding again to zero at $202,140. A single nurse earning $110,000 who puts in $1,200 keeps a reduced credit of $268, while a couple at $150,000 on the plateau gets $250, more than the $204 their full subtraction would bring.
| Joint AGI | Credit on $3,000 | Subtraction of $3,000 | Larger one |
|---|---|---|---|
| $70,000 | $500 | $204 | Credit |
| $115,000 | $334 | $204 | Credit |
| $150,000 | $250 | $204 | Credit |
| $190,000 | $121 | $204 | Subtraction |
| $245,000 | $0 | $236 | Subtraction |
The engine on this page treats the income you type as both AGI and taxable income. In practice the credit reads federal AGI and the subtraction reads Minnesota taxable income, which is lower, so check both lines of your own return.
Net contributions, not gross deposits
Both benefits count contributions minus the withdrawals taken during the same year, and money rolled in from another 529 is left out. A family that deposits $4,000 in March and pays a $2,500 tuition bill from the same account in August has a net figure of $1,500 for Minnesota. Spreading deposits and withdrawals across different calendar years keeps the full contribution in the count.
When Minnesota takes the benefit back
The plan's January 1, 2026 supplement says K-12 expenses and postsecondary credentialing are not qualified withdrawals for Minnesota, even though federal law now allows $20,000 a year for K-12. K-12 tuition paid from the account becomes a Minnesota addition, the lesser of the tuition distributed or the earnings on the 1099-Q. The supplement lists apprenticeship costs, loan repayments and rollovers to a Roth IRA as recapture events too; a filer who claimed the credit or the subtraction owes extra Minnesota tax under a statutory ratio formula. A plain rollover to another state's 529 follows federal treatment and is not on that list. The recapture page explains the mechanics across states.
A Minnesota K-12 withdrawal
Tax-free from the 529 this year (federal)
$9,000
| Federal cap per child, 2026 | $20,000 |
| Above the cap | $0 |
| Federal tax and 10 % on that part | $0 |
| Minnesota treatment | Not qualified: add-back or tax |
The Minnesota College Savings Plan
The state's own program is the Minnesota College Savings Plan, which stops taking contributions once a beneficiary's accounts reach $525,000. Parity means a Minnesotan who already holds an account elsewhere can keep funding it and still claim the credit or the subtraction.