Is your 529 Missouri tax deduction about to change?
Long version
If you've been saving for your child's or grandchild's college experience through a 529 plan, there's a bill moving through Jefferson City that you'll want to understand. House Bill 2116 would change how Missouri's 529 tax deductions work, affecting families across the state who are planning for education expenses.
Missouri's 529 plan: A 529 education savings plan is an investment account that offers tax benefits when used toward qualified education expenses. Most states sponsor a 529 plan. Missouri's version is the MOST 529 plan.
Missouri has been a long-time leader in the 529 arena. Seventeen years ago, it became the first state to allow a tax deduction for contributions to any state's 529 plan, not just Missouri's. Families could choose the 529 plan best for their education savings needs. work with their trusted financial professional and still receive the same tax deduction on their state return.
Today, only nine states offer that flexibility, and Missouri remains one of them.
What the house bill proposes: HB 2116 would dramatically change this approach. Under the proposed legislation, you would only receive the state tax deduction when contributing to Missouri's MOST 529 plan. Contributions to other states' plans would no longer qualify.
The potential impact: The tax deduction is currently worth up to $16,000 per year for married couples filing jointly ($8,000 for single filers). For families using out-of-state 529 plans, losing this deduction would increase their state tax liability.
The proposal would also narrow your available options. Different state 529 plans offer varying fee structures, investment portfolios, performance histories and service models. Currently, you can evaluate these differences and select the plan that aligns with your circumstances while still receiving the state tax benefit.
Finally, Missouri’s MOST plan operates as a direct-sold plan, meaning you manage your account independently and are unable to receive advice from your financial advisor. Many families work with financial advisors to compare plans, select investment options and monitor their savings strategy. Under HB 2116, families seeking advisor-assisted 529 plans would need to choose between professional guidance and the state tax deduction.
What 529 plans cover today: The 529 plans have become more versatile in recent years. You can use these funds for four-year college tuition, room and board, trade schools, vocational programs, K-12 private tuition, apprenticeship programs, student loan repayments and other qualified educational expenses like books and computers.
This flexibility means changes to 529 tax benefits can affect families with different educational goals and timelines.
Actions you can take: As HB 2116 moves through the legislative process, you may want to:
- Review your current 529 plan and determine whether it's Missouri's MOST plan or another state's plan
- Calculate how losing the deduction might affect your tax situation
- Discuss the implications with a financial advisor
- Monitor the bill's progress through the Missouri Legislature
- Contact state representatives to share your perspective (www.senate.mo.gov/LegisLookup)
Education savings is a long-term commitment, and understanding how tax policy affects these accounts can help you plan more effectively for your children's or grandchildren's futures.
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Edward Jones, its employees and financial advisors cannot provide tax or legal advice. Investors should consult with their attorney or qualified tax advisor regarding their situation.
This article was written by Edward Jones for use by your local Edward Jones financial advisor.
Edward Jones|Member SIPC
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Short version
For years, Missouri has allowed taxpayers to deduct contributions to any state’s 529 plan. That way, families can choose the plan that best fits their needs while still receiving the same state tax benefit.
A proposed bill in Jefferson City would change that approach. It's House Bill 2116.
Under the bill, only contributions to Missouri’s 529 plan would qualify for the state tax deduction. Families using out‑of‑state plans would lose a state tax deduction worth up to $16,000 a year for married couples filing jointly, $8,000 for single filers.
Because each state’s 529 plan has its own fees, investment options and performance record, limiting the deduction to Missouri’s plan may restrict your ability to choose the option that is best for you.
And since Missouri’s 529 plan is managed directly by the account holder — not a financial advisor — you may need to choose between professional guidance and the state tax deduction.
If you use a 529 plan, review your account, consider the tax impact and contact state representatives to share your perspective on House Bill 2116.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. Investors should consult with their attorney or qualified tax advisor regarding their situation.
This content was provided by Edward Jones for use by (FA’s NAME), your Edward Jones financial advisor at (Branch address or phone#). Member SIPC
Words: 175 (excluding FA’s name, address/phone number)