Questions & Answers

What contributions to a Family Education Savings Account can I subtract from my Montana income?

You can subtract up to $3,000 of the contributions that you made during 2020 to one or more Montana family education savings accounts. If you are married, both you and your spouse can subtract up to $3,000 for contributions that you made to one or more Montana family education savings accounts. This exclusion is allowed only for contributions that you make to a Montana family education savings account that is owned by you or jointly with your spouse.

You may also be able to include in your exclusion amounts that you use to establish a Montana family education savings account under the Montana Uniform Transfers to Minors Act or another state's Uniform Gifts to Minors Act for your child or stepchild if that child is a Montana resident.

Withdrawals of your contributions and earnings from a Montana family education savings account are not taxable to you if you withdraw them to pay for qualified higher educational expenses. If you withdraw these contributions for purposes other than to pay for qualified higher educational expenses, they are subject to a recapture tax of 6.9%, which we'll ask you about on the Miscellaneous Taxes screen.

Contributions to another state's 529 college savings plan may qualify for the deduction. The same rules apply to these contributions. Please note that contributions to a state's prepaid tuition plan don't qualify. The department may ask for a copy of any statement(s) from the plan administrator after you file your return.

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