Building A Strong Foundation: How The Maryland 529 Plan Shapes Educational Opportunities


With each passing summer, the countdown to the start of college draws nearer, bringing with it the formidable challenge of financing higher education.

The escalation of college expenses has been nothing short of meteoric over the past few decades, and this upward trajectory shows no signs of abating. According to projections by the U.S. Department of Education, the cumulative cost of a four-year degree is estimated to exceed $205,000 by the year 2030. The average annual cost of public colleges has increased 6.5% each year over the last decade, vastly outpacing the general rate of inflation and wage growth over that same time period. Put simply, it’s getting harder to pay the price tag for college.

This prevailing trend underscores the urgency of establishing a robust savings strategy for your children today.

How Does The Maryland 529 Plan Work

The Maryland 529 plan requires a minimum $25 investment, and the total maximum amount you can contribute to a Maryland 529 plan is $500,000 per beneficiary. The plan allows you to choose from a broad range of investment options, and as the investments grow, hopefully, you pay no taxes on any of the growth.

When you sell your investments and take money out of the Maryland 529 plan to pay for qualifying educational expenses for the beneficiary, both your contributions and all the earnings come out tax-free. Qualified educational expenses include tuition, fees, room and board, books, course-specific fees and supplies.

Funds from the account are versatile and accepted at nearly any accredited college or university in the country for undergraduate or graduate education. A noteworthy feature allows for up to $10,000 per year, per beneficiary, to be used toward tuition at kindergarten through grade 12 public, private or religious schools. The money in your account can also be used for apprenticeship programs registered with the U.S. Department of Labor or for the repayment of qualified education loans.

Tax Benefits Offered By The Maryland 529 Plan

If a taxpayer contributes to a Maryland 529 plan, a portion of the contribution can be subtracted from their income on their Maryland tax return.

Contributions up to $2,500 annually, per beneficiary, are eligible for a Maryland state income tax deduction for those filing a single return; and $5,000 per year, per beneficiary, for those filing a joint return. Excess contributions can be deducted for up to the next 10 years.

For example, if you have three children, and you and your spouse each contribute $2,500 to all three 529 accounts in a calendar year, you’ll get a $15,000 state income tax deduction.

The tax deduction serves as the icing on the cake, complementing the array of advantages offered by the Maryland 529 plan.

For more information on benefits and features associated with the Maryland 529 plan, John O’Callaghan can be reached at


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