What are the tax advantages of this program?

Account earnings grow tax-free. There are no federal taxes and, for North Carolina taxpayers, no state taxes on earnings either. Withdrawals used for Qualified Higher Education Expenses are exempt from both North Carolina and federal income taxes. Residents of states other than North Carolina should check with a tax advisor.

The features of a qualified tuition program are complex and involve significant tax issues. The earnings portion of withdrawals not used for Qualified Higher Education Expenses are subjected to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax benefits may be contingent on meeting other requirements.

Show All Answers

1. Who can open an account?
2. How much do I have to save?
3. What investment options are available?
4. What are the tax advantages of this program?
5. Where can my beneficiary use the money?