New York 529 tax deduction in 2026
A state deduction that also lowers New York City tax for city residents, a cap per return, and a hard line on K-12 tuition.
New York tax saved on this contribution
$540
5.4 % of what you put in comes back on your 2025 return.
| Subtracted from state income | $10,000 |
| Your state marginal rate | 5.40 % |
| Cap that applies this year | $10,000 |
| Back per $1,000 contributed | $54 |
New York: Subtraction for contributions made as account owner to New York's 529 College Savings Program, up to $5,000 ($10,000 married filing jointly) per year (IT-201 line 30). Read on 2026-10-19. No federal deduction exists for 529 contributions.
| Taxable income | Marginal rate | Tax saved |
|---|---|---|
| $50,000 | 5.40 % | $540 |
| $100,000 | 5.40 % | $540 |
| $200,000 | 5.90 % | $590 |
| $400,000 | 6.85 % | $685 |
Worked out by Radif Partners · How we calculate · New York rule read on October 19, 2026, brackets of tax year 2026 · not tax advice
New York lets the owner of an account in New York's 529 College Savings Program subtract up to $5,000 of contributions a year from state income, or $10,000 on a joint return. Only New York's own Direct and Advisor Guided programs count. The value follows your bracket: a Buffalo single parent at $68,000 who puts in $3,000 saves $162, a couple at $95,000 reaching the $10,000 cap saves $540. New York City residents gain more, because the city tax is computed on the same state base: a Brooklyn couple at $210,000 saves about $978 instead of $590. The cap is per return, not per child. New York still treats K-12 tuition withdrawals as non-qualified and adds back earlier deductions, while Roth IRA rollovers and student loan payments made on or after September 5, 2024 are qualified. Moving the money to another state's plan also triggers the add-back.
| Benefit for contributions | Deduction |
|---|---|
| Cap | $5,000 single, $10,000 joint per return |
| Another state’s plan counts | No, in-state plan only |
| State plans (official names, no recommendation) | New York's 529 College Savings Program Direct Plan, New York's 529 Advisor Guided College Savings Program |
| Account balance limit | $520,000 |
| K-12 withdrawals qualified for state tax | No |
| 529 to Roth IRA rollover qualified | Yes |
| Student loan payments qualified | Yes |
| Add-back on a rollover to another state’s plan | Yes |
The city tax doubles up the deduction
The New York subtraction reduces New York adjusted gross income, the base on which both the state tax and the New York City resident tax are computed. A city resident therefore saves twice on the same dollars: once at the state rate and once at the city rate. The calculator has a "local income tax rate" field in its advanced options for that purpose. With the top city rate of the 2025 IT-201 instructions, 3.876 %, typed in, a Brooklyn couple at $210,000 who contribute $10,000 saves $978, of which $388 comes from the city side. Lower city brackets apply to the first part of city taxable income, and the 2026 city schedule was not published when we read the instructions.
With the city rate added
New York tax saved on this contribution
$978
| Subtracted from state income | $10,000 |
| Your state marginal rate | 5.90 % |
| Cap that applies this year | $10,000 |
| Back per $1,000 contributed | $98 |
Owner, return and cap
The 2025 IT-201 instructions limit the subtraction to contributions made as account owner, up to $5,000 per return or $10,000 on a joint one. Several children do not raise it: a family with three accounts still stops at $10,000. Contributions above the cap stay in the account and grow, but earn nothing more on the New York return. A grandparent who owns an account for a grandchild claims the subtraction on their own return.
The state's rates rise from 3.9 % to 10.9 %, and New York also recaptures the benefit of its lower brackets above a certain income, so the marginal rate the calculator shows can understate the real one for high earners; the state's note on its schedule explains the supplemental computation.
K-12 tuition: free federally, taxed in Albany
Since the federal K-12 rule started in 2018, New York has treated tuition withdrawals for elementary and secondary school as non-qualified. The deductions taken on that money come back on line 22 of the IT-201. The 2025 federal law doubled the federal cap to $20,000, and New York's plan site says tuition stays non-qualified for New York; the Department of Taxation and Finance had not decided, when we read it, how it treats the newly added K-12 expenses such as tutoring or test fees. A family that deducted $18,000 over the years and then spends it on private school would add that amount back, about $1,062 at a 5.90 % rate. The K-12 page compares states.
Credentialing costs follow a split rule in the IT-201 instructions: paid to an eligible educational institution on or after July 4, 2025, they count as qualified; paid elsewhere, they do not.
Staying with the New York plan
Because only New York's programs earn the subtraction, the couple in Albany would give up $540 a year by using another state's plan, $6,480 over twelve years. Rolling an existing New York account to another state's plan is also treated as a non-qualified withdrawal for New York purposes, so the deductions come back. Accounts in New York's program stop accepting contributions at $520,000 per beneficiary.
Deductions at stake if the account leaves
New York tax if the deductions come back
$2,160
| Amount added back | $40,000 |
| Your state marginal rate | 5.40 % |