Reply To: The New Tax Law – 2018 – How it affects frum families

In New York State anyone can claim a state income tax deduction of up to $10,000 per year for Yeshiva education tuition costs paid from a 529 Account. As a result of the new federal tax law, starting in January 2018 it makes sense for everyone with Yeshiva K-12 tuition charges to pay it from a 529 Account. This will allow the first $10,000 of tuition every year to be deducted from your New York State income taxes. You can put the money into a 529 Account and then immediately use it to pay tuition. That’s all you need to do to get the State income tax deduction.

Some other states have much more generous 529 allowances than the NYS $10,000. In those states this tax benefit for Yeshiva tuition costs will be even larger. Illinois, for instance, allows deductions for $20,000 in contributions a year per beneficiary (in other words – per child) to 529 plans, while Pennsylvania allows $28,000. Colorado, New Mexico, South Carolina and West Virginia have broader tax benefits: all 529 contributions are fully deductible, so participants’ entire private school tuition could be free of state tax.

I think this is important information for all yeshiva tuition paying parents to know. This all starts in 10 days.

The tax bill was signed into law today by President Trump.