Can I use a 529 plan to wipe out Georgia state taxes owed?

We have a kid in college, a freshman. While working on 2024 taxes, we will owe $125 to the State of Georgia.

If I open a 529 plan and put $2000 in it before April 15, 2025, my Georgia state tax bill goes to zero.

Normally, I’d keep that money in a high-yield savings account and earn about $60 (after taxes) for the year.

Is it better to move the $2000 into the 529 and use it for college costs?

From what I’ve read, Georgia does allow a contribution deadline of April 15 for deductions.

Cass said:
From what I’ve read, Georgia does allow a contribution deadline of April 15 for deductions.

Yeah, Georgia has that exception, so contributions made by April 15 still count for the previous tax year.

Cass said:
From what I’ve read, Georgia does allow a contribution deadline of April 15 for deductions.

I thought 529 contributions were based on the calendar year, not allowing a grace period?

@Kale
Depends on the state. In Georgia, you can contribute up to April 15 for tax benefits.

Traceyjovy said:
@Kale
Depends on the state. In Georgia, you can contribute up to April 15 for tax benefits.

I looked at the Path2College 529 website but couldn’t find anything confirming that.

If you’re already paying for college and don’t need this money for anything else, then yeah, it makes sense.

Putting money toward education while lowering taxes is always good.

Just remember, once you put it in a 529, it’s locked for qualified expenses. If you take it out for something else, you’ll owe taxes plus a penalty on the earnings.

If your budget allows, why not contribute $8K instead? You’d get a bigger tax break.

Kamila said:
If your budget allows, why not contribute $8K instead? You’d get a bigger tax break.

How does that work?

Bridget said:

Kamila said:
If your budget allows, why not contribute $8K instead? You’d get a bigger tax break.

How does that work?

Georgia lets you deduct up to $8K in 529 contributions if you file jointly.

@Kamila
That’s really good to know.

Kamila said:
If your budget allows, why not contribute $8K instead? You’d get a bigger tax break.

Thinking about that too. It would give me a $310 refund instead of owing $125, plus small tax-free gains on the $8K.

@Phoebe
If you’re already spending $8K on tuition, this is an easy win. You’re getting an instant return of more than 5%.

You might find checking tax resources helpful before making a decision.

Yes, and you could put it in something like bonds within the 529 to still earn some interest.

The idea is that this money would go toward tuition anyway, so you’re just getting a tax break on top of it.