The Department of Revenue does not administer the higher education savings plan. The plan is administered by the Georgia Higher Education Savings Plan. For information about the plan, visit www.gacollegesavings.com or call 877-424-4377. The following highlights the Georgia income tax provisions of the plan:

The purpose of the plan is to provide a tax-advantaged method of saving for post-secondary education. For Georgia income tax purposes, a deduction of up to $2,000 per beneficiary is allowed for contributions made to the plan. In addition, the Georgia income tax law provides an exclusion from Georgia taxable income for the earnings when they are withdrawn for qualified education expenses. The major provisions are:

1. Contributions can be made until the total balance for all accounts for a beneficiary reaches $235,000.
2. For taxable years beginning on or after January 1, 2002, up to $2,000 per beneficiary can be deducted on a Georgia income tax return by parents or legal guardians of a designated beneficiary, provided the following are true:
   • The beneficiary is claimed as a dependent on the Georgia income tax return of the parents or legal guardians;
   • The parents or legal guardians itemize deductions on their Federal and Georgia income tax returns. Taxpayers who take the standard deduction on their returns are not eligible for the $2,000 deduction related to the Georgia Higher Education Savings Plan; and
   • The parents or legal guardians own the account.
3. The deduction decreases $400 per beneficiary for each $1,000 of Federal Adjusted Gross Income over:
   • $100,000 for a married filing joint return; or
   • $50,000 for a single, head of household, qualifying widow(er), or married filing separate return.
4. Contributions made on or before April 15, 2004 may be treated as being made for the 2005 income tax year.
5. The earnings portion of withdrawals used exclusively for qualified higher education expenses and withdrawals that are not subject to Federal income tax (see the one year exception below) are not subject to Georgia income tax. Georgia follows Federal guidelines under IRC 529 in determining what is considered qualified higher education expenses.
6. Withdrawals that are not for qualified education expenses or that are subject to Federal income tax are subject to Georgia income tax. This includes any amounts that are withdrawn from the Georgia Higher Education Savings Plan within one year from establishment of the plan.

For more information, see Georgia Regulation 560-7-4-.04. This regulation as well as other information on Georgia income tax laws can be accessed through the Georgia Website.

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