Updated October 4, 2026. Quick answer: Yes, for Alabama’s own 529 programs. The Department of Revenue says contributions “are deductible on a state of Alabama income tax return”, and states the amount as “up to $5,000 per Alabama taxpayer or $10,000 for married Alabama taxpayers”.
What Alabama allows for 529 contributions
| Item | What the documents say |
|---|---|
| Treatment | Deduction on the Alabama return |
| Limit | $5,000, or $10,000 for married taxpayers |
| Plans that qualify | The CollegeCounts 529 Fund and other State of Alabama 529 programs; the plan disclosure names no out-of-state plan |
| Not-qualified withdrawals | The amount withdrawn is added back to the contributor’s Alabama income, plus ten percent of it |
| Source | Alabama Department of Revenue FAQ and 2025 Form 40 booklet; CollegeCounts 529 Fund |
A $10,000 contribution by a married couple
A married couple who put $10,000 into a CollegeCounts account for one child are at the $10,000 limit for married taxpayers, so the whole $10,000 fits under it.
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Which plans count
The plan’s tax page limits the deduction to “contributions to the Plan and other State of Alabama 529 programs”. A contribution to another state’s plan is not described as deductible.
What the documents do not say
- 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
- Assuming a contribution to another state’s 529 plan earns the Alabama deduction; the documents name only Alabama programs.
Related: how Alabama taxes retirement income, whether Alabama taxes pensions, the five questions behind any 529 state tax break, and the state-by-state table of 529 deductions.
Sources
- What is the Alabama state income tax deduction for contributions to the CollegeCounts 529 Plan? (FAQ): https://www.revenue.alabama.gov/faqs/what-is-the-alabama-state-income-tax-deduction-for-contributions-to-the-collegecounts-529-plan/
- 2025 Alabama Form 40 Booklet (Line 8 instructions): https://www.revenue.alabama.gov/wp-content/uploads/2026/01/25f40bk.pdf
- CollegeCounts 529 Fund Tax Center (Alabama state income tax deduction and Program Description): https://collegecounts529.com/tax-center/
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.