“In the year 2020, Iowans can put $3,439 into their college savings account for each child they want to save for and deduct it right from their Iowa income tax,” Fitzgerald says. That is an increase of $52 from the amount you could deduct for the 2019 tax year.
“It’s written in to law that if the Consumer Price Index –the cost of living index — goes up, that’s the amount that will be the increase each year for what you can put into College Savings Iowa,”Fitzgerald says.
He encourages all parents to start a savings plan. “It’s never too early to get started saving, and the habit of saving is real, real important, because it surprisingly builds up over time,” according to Fitzgerald. “And I’ve had so many parents and grandparents tell me how happy they were with the growth of the college savings plan. When you get in you get to take advantage of that tax break and also — the federal government won’t charge you income tax on the growth either.”
Fitzgerald says the College Savings Iowa money goes toward most college expenses. “Not only can it be used for tuition, but board and room when you go to school. And of course the computers, it can be used for buying books, all those expenses,” Fitzgerald says. “You cannot buy clothes and you cannot pay for transportation.”
Fitzgerald says it’s easy to start a savings plan for your child. “You can just go to CollegeSavings.com and it will take you about five minutes. You need to have your name and your Social Security number. And then you need to know the name of the child you’re saving for that’s under 18, and their Social Security number. And then you fill out the box for the 14 different ways you want to have it invested,” Fitzgerald says.
If you already have a College Savings Iowa account, he says you still have time to put money in and get a tax break your 2029 returns. “You can still that for last year until April 30th when you file your Iowa income taxes,” Fitzgerald says.
Fitzgerald says College Savings Iowa has more than 248,000 active accounts and almost three billion dollars has been used for qualified educational expenses.