Here’s How It Works:
Maryland Prepaid College Trust*
If you are the Account Holder or a contributor, you can deduct up to $2,500 per Account from your Maryland State income for payments in that calendar year. Payments in excess of $2,500 per Account can be deducted in future years until the full amount of payments has been deducted.
For example: If you purchase a 2-year University Plan for your child for a lump sum of $21,000, you can deduct $2,500 per tax year for each of Years 1 through 8. Over time, that adds up to a total of $20,000. You can then deduct the remaining $1,000 of your payment in Year 9.
As of June 1, 2023, the Maryland Prepaid College Trust is no longer accepting new enrollments. Existing Account Holders may continue to make contributions to their Account and are still eligible to take the income deduction, if they are a Maryland taxpayer.
Maryland College Investment Plan
If you are the Account Holder or a contributor, you can deduct up to $2,500 per Beneficiary from your Maryland State income for contributions in that calendar year. Contributions in excess of $2,500 per Beneficiary can be deducted for up to the next 10 years.
For example: If you contribute $27,500 in Year 1 to the College Investment Plan for your child, you may deduct $2,500 per tax year for each of Years 1 through 11 (11 x $2,500 = $27,500). If you also contribute $27,500 in Year 1 to one or more Investment Portfolios for another child, you may deduct an additional $2,500 per tax year for each of Years 1 through 11, for a total deduction of $5,000 per tax year from Maryland adjusted gross income.