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The Complete Guide for Parents, Grandparents & Georgia Taxpayers (2025 Update)

A Comprehensive Guide from EAS Income Tax Services – Glen L. Graves II, CPA, CTRS

Saving for a child’s education has never been more important — or more confusing. Fortunately, Georgia’s Path2College 529 Plan offers one of the most flexible and tax-advantaged ways to save for future education expenses. Whether you’re a parent, grandparent, step-parent, or family friend, Georgia taxpayers can take advantage of meaningful state income tax deductions and long-term tax-free growth.

This guide explains how the Georgia 529 Plan works, who qualifies for the deduction, how much you can save, and what happens if the child doesn’t go to college. It also includes a special section on how multiple adults can legally claim the Georgia tax deduction using separate 529 accounts — a common estate and education planning strategy.

🎓 What Is the Georgia Path2College 529 Plan?

The Georgia Path2College 529 Plan is the state-sponsored college savings plan that allows families to save for education with powerful tax benefits. Funds can be used for:

• College and university tuition
• Trade school and vocational programs
• K–12 private school tuition (up to $10,000 per year)
• Apprenticeships
• Student loan repayment (up to $10,000 lifetime)
• Computers, books, room and board, and other qualifying expenses

Unlike traditional investment accounts, a 529 plan grows tax-free, and withdrawals are tax-free when used for qualifying education expenses.

💰 Georgia State Tax Deductions: How Much Can You Save Each Year?

Georgia offers a generous state income tax deduction for contributions made by the account owner. This deduction applies even if someone else gives you the money to deposit.

Deduction Limits (2025):

Annual Tax Savings at Georgia’s 5.49% Flat Tax Rate:

• Single filer: Up to $219.60 per beneficiary
• MFJ filer: Up to $439.20 per beneficiary

Families who contribute annually over 10–18 years can accumulate thousands of dollars in Georgia tax savings — even before accounting for investment growth.

👨‍👩‍👧 Who Gets the Georgia 529 Tax Deduction? (The Most Important Rule)

The Georgia 529 deduction is available only to the account owner, not the donor.

Examples:

• If you own the account, you get the deduction — even if grandparents or friends contribute.
• If the mother owns her own 529 account for the same child, she gets the deduction on her Georgia return.
• If you and the child’s mother are not married, and you each want the deduction, you must each open your own 529 account.

✔ Filing Status Determines the Deduction

• If she files Single or Head of Household, she can deduct up to $4,000 per beneficiary.
• If you file MFJ, you can deduct up to $8,000 per beneficiary.

These limits apply independently — meaning two separate adult account owners can each claim their own deduction for the same beneficiary as long as they own separate accounts.

🔄 What If the Child Doesn’t Go to College?

A common question — and the answer today is more favorable than ever.

✔ Option 1: Change the Beneficiary

You may switch the beneficiary to:

• A sibling
• A cousin
• A grandchild
• Even yourself

No tax, no penalty.

✔ Option 2: Use for Trade School, Apprenticeships, or K–12 Tuition

529 plans now cover far more than traditional college programs.

✔ Option 3: Roll Up to $35,000 Into a Roth IRA

A new federal rule allows leftover 529 funds to be rolled into the beneficiary’s Roth IRA tax-free, subject to:

• 15-year account age
• Annual Roth limits
• $35,000 lifetime rollover

✔ Option 4: Keep the Account for Future Generations

529 plans do not expire.

✔ Option 5: Withdraw Non-Qualified (Least Ideal)

If you withdraw funds for non-qualified expenses:

• Only the earnings are taxable
• Earnings also incur a 10% penalty
• Contributions are always tax- and penalty-free

🧠 Advanced Planning: When Multiple Adults Want the Deduction

This is where many families accidentally leave money on the table.

Scenario:

You are the 529 owner and file MFJ with your spouse, who is not the child’s mother.
The child’s mother wants the Georgia 529 tax deduction too.

Solution:

➡️ She must open her own separate 529 account as the account owner (not co-owner or contributor).
➡️ She can then deduct up to $4,000 per year (or $8,000 if she files MFJ with someone else).

This is completely permitted and commonly used in blended families, divorced households, and grandparent gifting strategies.

📊 Example: Maximizing Georgia 529 Tax Benefits

Family Structure: Father + Mother (not married)

• Father files MFJ and contributes $8,000
• Mother files Single and contributes $4,000

Total Annual Georgia Tax Savings

• Father: $8,000 × 5.49% = $439.20
• Mother: $4,000 × 5.49% = $219.60

➡️ Combined tax savings: $658.80 per year
➡️ Over 18 years: $11,858.40 (not including investment growth)

That’s the equivalent of getting more than two years of textbook costs or one semester of tuition paid by the state.

🏦 Do Other People Get the Deduction If They Contribute?

No.
Georgia does not track who contributes.
It only matters who owns the account.

If grandparents want the deduction, they must open their own 529 account.

📌 Why Georgia 529 Plans Are So Powerful

• Tax-free growth
• Tax-free withdrawals
• State tax deduction
• Very low maintenance
• Beneficiary can be changed
• New Roth IRA rollover rules
• Can be used for trade schools, apprenticeships, K–12
• Flexible for blended families and multi-owner strategies

For many Georgia residents, it’s one of the most tax-efficient tools available.

✔️ Final Thoughts

The Georgia Path2College 529 Plan is a powerful planning tool for parents, grandparents, and anyone supporting a child’s future education. With flexible contribution rules, strong state tax deductions, and broad permitted uses — including trade programs and Roth IRA rollovers — the 529 plan has become a cornerstone strategy in long-term financial planning.

If you’re looking to maximize your Georgia tax savings, coordinate multiple family contributions, or integrate a 529 plan into your overall financial strategy, EAS Income Tax Services is here to help.

I look forward to working with you and building a long-term professional relationship. Income Tax Services today. Call us at (404) 719-0330 or email us at GLG@eas.tax to schedule a consultation.