Oregon offers two qualified 529 college savings plans—Embark (formerly Oregon College Savings Plan) and the MFS 529 Savings Plan—that allow individuals to save for higher education expenses with favorable tax treatment. These plans are recognized under Internal Revenue Code (IRC) Section 529 as qualified tuition programs, meaning earnings grow tax-free and withdrawals are tax-free when used for qualified education expenses.
Education Saving Plan Contributions:
You may qualify for a tax credit if you made a contribution to a qualified Oregon higher education savings plan account during tax years beginning on or after January 1, 2020.
- You must make contributions may be made up until the date the return is filed or the due date (not including extensions), whichever is earlier.
- A tax credit of up to $180 ($360 if married filing jointly) is available for taxpayers who make contributions to a qualified plan.
- The credit is based on the taxpayer's Oregon adjusted gross income, filing status, and qualifying contributions.
- The credit is refundable
Tax Refund Contributions:
- Schedule OR-529 allows taxpayers to direct part or all of an Oregon income tax refund into an existing Embark or MFS 529 Savings Plan account.
- Deposits can only be made to existing accounts
- You must deposit at least $25 per account
- Maximum of four accounts can be deposited into
If you do not have an existing account and would like to create on, complete section 2 of Schedule OR-529 and submit to Upward Oregon (see form instructions)
Education Plan Withdrawals:
Qualified Withdrawals: Funds that are withdrawn from the account must be used to pay for the designated beneficiary’s qualified higher education expenses. These include expenses for:
- Tuition, fees, books, supplies, equipment, and room and board at an eligible educational institutional anywhere in the United States and certain foreign countries
- Rollovers to an ABLE account for the same designated beneficiary or a member of their family.
- Expenses related to apprenticeship programs registered and certified under the National Apprenticeship Act (29 U.S.C. 50).
- Principal and interest payments on up to $10,000 of the designated beneficiary’s (or their sibling’s) qualified education loans, as allowed by IRC Section 529.
Nonqualified Withdrawals: Nonqualified withdrawals include funds with drawn from an Oregon higher education savings plan account that are
- Used to pay K-12 tuition if those funds were subtracted or
- Claimed as a credit on an Oregon return.
Nonqualified withdrawals may be subject to tax and penalties.
Tax Treatment in Oregon
- Schedule OR-529 is specifically an Oregon income tax refund deposit and account-creation election. It should not be described as a separate Oregon deduction or tax credit for 529 contributions.
- Federal tax treatment of qualified tuition programs is governed primarily by IRC §529. Any Oregon-specific tax credit, subtraction, or other tax treatment should be addressed separately under the applicable Oregon tax provisions rather than attributed to Schedule OR-529.
Source:
Schedule OR-529 Instructions
Publication OR-17
Disclaimer: Always verify details with the official forms and instructions from the Oregon Department of Revenue. For complex situations, consult a CPA or tax professional.