Welcome to Curt's Chalk Talk, the late game college funding series. I'm Curt Sheldon with C.L. Sheldon & Company, and today I want talk to you, but I'm gonna talk a little bit softly 'cause we're gonna talk about laundering money. Actually, we're not gonna launder money, but we're going talk about how the tax code can help you make college just a little bit less expensive. It has to do with 529 plans.
Now, many states out there will give you a state income tax deduction if you contribute to their 529 plan. Now I a know a lot of you have probably forgotten or didn't even really think about state income taxes, but they're out there, I can tell you they're real. So for instance, in the state that I live in, Virginia, you can deduct up to $4,000 per year per child per parent against your Virginia income. And at a state tax rate of about 5%, that's gonna cut your taxes by about $200. Actually, Virginia's 5.75, so it's a little bit closer to $230.
And here's the catch, in most cases, the funds don't have to be in the 529 plan for any significant amount of time. So you could literally contribute the funds to the 529 plans, a couple days later, take the funds out to pay for tuition, and take the tax deduction. All it takes is a little bit of your time. Saving 230 bucks or more against your taxes is a pretty good deal. In most cases, as I said, it has to be the state that you're a resident of, but a few states like Pennsylvania, will allow you to contribute to any 529 plan and take the deduction.
And there are one or two states out there that require the funds to be in there for at least a year. So make sure you check your state's rules, but this is an option that's available to you.
There are a lot of options out there, and you haven't spent your military career learning about them. If you'd like a little bit of help, we have a checklist to help you transition from the military to the civilian world, and keep your finances in order. If you'd like to get it, go to www.clsheldon.com/college. That's www.clsheldon.com/college, and you can download it for free.