Deduct up to $4,000 per year, per account from your Virginia taxable income
All VEST account owners with Virginia taxable income who file Virginia income tax returns can deduct up to $4,000 per year per account ($2,000 prior to 2009). Or you can deduct the amount paid during the year, whichever is less, with unlimited carry forward until the amount of your contributions has been deducted. This means that over time, you get the benefit of deducting the entire cost of contributions made to the plan.
VEST account owners age 70 or above may deduct the entire amount of their contributions at one time or in any future tax years. If you are not a Virginia taxpayer, please consult a tax adviser or your state's department of taxation to determine your state's tax treatment of a Virginia 529 account.
There is no federal tax on any interest on the increased value each year
All VEST account owners benefit from tax-free earnings, tax-free qualified distributions and favorable federal estate and gift tax provisions. Since VEST earnings are not taxed at the federal level (or the state level for Virginia taxpayers) if the account is used to pay qualified higher education expenses, account owners have a potentially greater after-tax return on their investment than with a comparable taxable investment. Tax-free qualified distributions mean you get to keep and use more of your investment toward qualified higher education expenses.