Tax Questions

If you are an Idaho taxpayer, you are eligible for a state income tax deduction of up to $6,000 ($12,000 if married, filing jointly) for your IDeal contributions for each tax period. (Contributions to the IDeal - Idaho Education Savings Program are deductible from Idaho state income tax, subject to recapture in certain circumstances, such as a non-qualified withdrawal or a rollover to another state's qualified tuition program in the year of the rollover and the prior tax year). Earnings in your IDeal account grow tax-deferred and are free from federal income tax when used for qualified education expenses.¹

Individuals can invest up to $19,000 ($38,000 for married couples) per beneficiary without incurring any federal gift-tax consequences. You can also contribute up to $95,000 per beneficiary in a single year ($190,000 for married couples) and take advantage of five years' worth of tax-free gifts at one time. Contributions are considered completed gifts and are removed from your estate^*, but you, as the account owner, retain control. Upon the death of the account owner, money remaining in the account will not be included in the account owner's estate for federal estate tax purposes. For more information, consult your tax advisor or estate-planning attorney.

^*In the event the donor does not survive the five-year period, a pro-rated amount will revert to the donor's taxable estate.

Yes. Idaho employers qualify for a 20% tax credit, up to $500 per employee per year, for contributions to an employee's IDeal account. The employee may take an Idaho state income tax deduction for contributions made by his/her employer.

The plan will generate a Form 1099-Q in January of the calendar year following a year in which there was a withdrawal from the account. The recipient of the 1099-Q will be either the account owner or the beneficiary, depending on who received the proceeds of the withdrawal. Withdrawals sent to the account owner will be reported under the account owner's Social Security number. Withdrawals sent to the beneficiary or to an educational institution will be reported under the beneficiary's Social Security number, per IRS guidelines.

On July 4, 2025, H.R. 1 was signed into federal law. H.R. 1 includes amendments to Section 529 of the Internal Revenue Code that expand the types of expenses considered qualified for federal tax purposes.

Effective for withdrawals made beginning July 5, 2025, savers can now use a 529 account for certain “Qualified Postsecondary Credentialing Expenses”, including:

• tuition, fees, books, supplies, and equipment required to enroll in or attend a “Recognized Postsecondary Credential Program”
• fees for testing if required to obtain or maintain a “Recognized Postsecondary Credential”
• fees for continuing education if required to obtain or maintain a “Recognized Postsecondary Credential”

Also, effective for withdrawals made beginning July 5,2025, those using their 529 account for K-12 expenses can use their savings not just for tuition, but also for related expenses including books, certain testing fees, tutoring or educational classes outside of the home, fees for dual enrollment in an institution of higher education, and educational therapies for students with disabilities.

Effective January 1, 2026, the annual withdrawal limit per beneficiary for K-12 expenses increases from $10,000 to $20,000.

This information is intended to provide a brief highlight of some of the changes enacted as part of H.R. 1 that impact 529 plans for federal tax purposes. It is important to note that H.R. 1 contains a specific definition of “Qualified Postsecondary Credentialing Expenses” and sets forth in detail the types of expenses that are now qualified in connection with the beneficiary’s enrollment or attendance at a K-12 school.

State tax treatment of your investments in the Plan may differ from the federal tax treatment. You should consult with your tax advisor to learn more about these new provisions and your personal situation. The taxpayer has the responsibility to maintain records to document the use of funds associated with these new provisions, and any tax reporting that may be required.

For more information about H.R. 1 and its impact, including details about what expenses qualify, please review the Supplement dated September 2025 to the Program Disclosure Statement dated June 2024. You can also review the text of the H.R. 1 legislation here.

IDeal can help you potentially increase your refund. Deduct your IDeal contributions on Form 39 of your Idaho tax return. Idaho taxpayers can qualify for up to a $12,000 state tax deduction (up to $6,000 for individuals), when they contribute to any IDeal 529 account.^*

^*Earnings on non-qualified withdrawals are subject to federal income tax and may be subject to a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

Yes, If you are filing online or by paper, it’s easy to have your tax return deposited into your IDeal account just like you would into a traditional bank account. Simply include IDeal as the refund direct deposit destination when prompted by the online service, or on either From 40 or Form 43.

• IDeal Routing Number: ABA Number 011001234 (Mellon Bank)
• IDeal Account Number: 541 + 11-digit account number