ScholarShare 529
How ScholarShare 529 is taxed in California, which withdrawals are tax-free, how K-12 withdrawals are taxed, and a calculator.
ScholarShare 529 K-12 California tax calculator
ScholarShare 529 tax benefits
ScholarShare 529 is California's 529 plan. California doesn't give a state income tax deduction for contributions, but earnings grow free of federal and California tax, and withdrawals for qualified college costs are tax-free.
Where California is different
- K-12 tuition: federal law allows up to $20,000 a year per student, but for California taxpayers the earnings portion is subject to California income tax plus an additional 2.5% California tax (ScholarShare).
- Apprenticeships, recognized credentialing programs and student loan repayments can be withdrawn free of both federal and California tax.
- Out-of-state account owners may face their own state's recapture and penalties.
Example: a $10,000 K-12 withdrawal from an account that's 30% earnings: $3,000 of earnings, $279 of California tax at 9.3%, plus $75 additional tax. Project college savings with the 529 calculator.
Common questions
Does California give a tax deduction for ScholarShare 529?
No, but earnings grow tax-free for qualified education costs.
Can I use ScholarShare 529 for K-12 in California?
Yes, but the earnings portion is taxed by California plus an additional 2.5%.
Can ScholarShare 529 pay student loans tax-free in California?
Yes, according to ScholarShare.
Sources
More savings and interest calculators: Ohio529 · PA529 · Ten Year Treasury Yield · Treasury T Bills
Related
General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.