529 deduction: YesTax parity: No — Alabama's plan only
In-state plan only
Most states that offer a 529 tax break only give it for their own in-state plan, and Alabama follows that rule: only contributions to the State of Alabama's 529 programs — CollegeCounts — count toward the deduction. Contributions to another state's plan get no Alabama tax break. If the deduction matters to you, that tilts the choice toward CollegeCounts; if another state's plan wins decisively on fees or investment options, weigh that against the deduction you'd give up.
The deduction
Alabama allows a deduction of up to $5,000 per year for single filers, or up to $10,000 for a married couple filing jointly when both spouses contribute. The limit is per taxpayer — not per beneficiary — and applies to combined contributions across all of Alabama's 529 programs. One caution: on a nonqualified withdrawal, the amount withdrawn is added back to the contributing taxpayer's Alabama income, plus 10% of the amount withdrawn. Limits change yearly — confirm the current figure with the Alabama plan.
How it fits with the gift-tax rules
A 529 contribution is also a gift for federal purposes, so it counts toward the $19,000 annual exclusion (2026). The 5-year election ("superfunding") lets you front-load up to $95,000 per donor per child without using any lifetime exemption.
See how much you can front-load with the 529 Superfunding Calculator, and keep family contributions within the exclusion with the Gift Tax Calculator.
529 deductions & credits in other states
Tax-parity states let you deduct contributions to any state's 529 plan; the rest limit the benefit to their own plan.
Tax parity: Arizona · Arkansas · Kansas · Maine · Minnesota · Missouri · Montana · Ohio · Pennsylvania
Own-plan deduction or credit: New York · New Jersey · Connecticut · Massachusetts · Rhode Island · Vermont · Illinois · Indiana · Michigan · Wisconsin · Iowa · North Dakota · Virginia · Maryland · District of Columbia · West Virginia · Georgia · South Carolina · Colorado · New Mexico · Utah · Idaho · Oregon · Oklahoma · Mississippi · Louisiana · Nebraska
General information, not tax advice. 529 deduction rules and limits change yearly and this page may not reflect the latest figure — confirm with the Alabama plan and your CPA. Alabama's deduction is limited to the state's own 529 programs as of recent guidance.
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