Updated October 4, 2026. Quick answer: Yes, with an income test. New Jersey’s Division of Taxation says you can “deduct up to $10,000 of contributions made during the year” into an NJBEST account, for filers “showing gross income of $200,000 or less”.
What New Jersey allows for 529 contributions
| Item | What the documents say |
|---|---|
| Treatment | Deduction |
| Limit | $10,000 of contributions in the year |
| Income test | Gross income of $200,000 or less |
| Plans that qualify | NJBEST accounts |
| Not-qualified withdrawals | Taxable to the extent they are earnings or contributions previously deducted |
| Source | New Jersey Division of Taxation, 2025 NJ-1040 instructions; P.L.2021, c.128 |
A $10,000 contribution by a married couple
A couple whose gross income is $200,000 or less and who put $10,000 into an NJBEST account can deduct the whole $10,000, the limit. Above $200,000 of gross income the deduction is not available under the rule the Division describes.
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The statute
P.L.2021, c.128 added the deduction for contributions to an NJBEST account. On withdrawals, the law includes in income “the amount of the distribution attributable to contributions allowed as a deduction”.
Married filing separately
For spouses who file separately, the NJ-1040 instructions say their combined deductions cannot exceed the stated amounts.
What the documents do not say
- Whether the $10,000 is per return or per beneficiary.
- Whether excess contributions carry forward to a later year.
What changes in 2026
No change for tax year 2026 appears in the documents read for this page.
Federal rules
A state break sits beside the federal rules for 529 plans: the statute is 26 U.S.C. 529 and the IRS explains it in Publication 970, Tax Benefits for Education.
Common mistakes
- Taking the deduction above the $200,000 gross income line.
Related: how New Jersey taxes retirement income, whether New Jersey taxes pensions, the five questions behind any 529 state tax break, and the state-by-state table of 529 deductions.
Sources
- 2025 Form NJ-1040 Instructions: https://www.nj.gov/treasury/taxation/pdf/current/1040i.pdf
- New Jersey College Affordability Act (College and Tuition Assistance): https://www.nj.gov/treasury/taxation/individuals/collegededuction.shtml
- P.L.2021, c.128 (C.54A:3-12, C.54A:6-25): https://pub.njleg.state.nj.us/Bills/2020/PL21/128_.PDF
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.