Updated October 4, 2026. Quick answer: Yes, as a credit rather than a deduction. The statute allows a “nonrefundable credit against the tax imposed under section 5822” equal to “10 percent of the first $2,500.00 per beneficiary” contributed to a VT529 account, or $250 at most per beneficiary.
What Vermont allows for 529 contributions
| Item | What the documents say |
|---|---|
| Treatment | Nonrefundable credit against the Vermont tax (not a deduction) |
| Rate and cap | 10 percent of the first $2,500 contributed per beneficiary, so up to $250 |
| Joint returns | Each spouse filing a joint return is eligible; the statute prints no single joint-return total |
| Plans that qualify | A Vermont Higher Education Investment Plan account provided directly by the Vermont Student Assistance Corporation |
| Not-qualified withdrawals | The taxpayer repays 10 percent of the distribution, up to the credits received, except for qualified uses |
| Source | 32 V.S.A. 5825a |
A $10,000 contribution by a married couple
A married couple who put $10,000 into a VT529 account for one child: the credit is on the first $2,500 per beneficiary, so $250. The statute names “including each spouse filing a joint return” as eligible, but prints no joint-return total, so confirm with the Vermont Student Assistance Corporation before assuming the figure doubles.
Optional adviser-matching service
Balance education savings with retirement
For U.S. investors with $250,000 or more in investable assets. Want help balancing education savings with retirement? Request adviser introductions for your wider investment plan.
This is investment-adviser matching, not 529 enrollment or tax-return preparation.
WiserAdvisor is an independent matching service. Free to request, with no obligation to hire. Request up to three adviser introductions; a match is not guaranteed. Submitting its form allows calls, texts and emails from WiserAdvisor and up to three advisers.
Clear Money Guide may earn a referral payment for a qualifying completed form. Advisers pay for introductions; an introduction is not a Clear Money Guide recommendation.
Compare investment advisersOpens on WiserAdvisor’s site in a new tab.
Which plan, and repayment
The credit is for an account “provided directly by the Vermont Student Assistance” Corporation. On a distribution the statute says the taxpayer “shall repay to the Commissioner 10 percent of any distribution”, up to the credits received, with exceptions for qualified uses.
What the documents do not say
- Whether excess contributions carry forward to a later year.
- A single joint-return dollar total; the statute states the limit per beneficiary.
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
- Treating the credit as a deduction; it comes off the tax bill, not the income.
Related: how Vermont taxes retirement income, whether Vermont taxes pensions, the five questions behind any 529 state tax break, and the state-by-state table of 529 deductions.
Sources
- 32 V.S.A. 5825a, Credit for Vermont Higher Education Investment Plan contributions: https://legislature.vermont.gov/statutes/section/32/151/05825a
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.