Show You Care with the Gift of Education and Get a Gift Back for Yourself

Toys and games come and go, but the gift of a college education lasts forever, and opens the door to a lifetime of opportunities.

You can give your loved ones something truly meaningful, and get a gift back for yourself as well when you contribute to the Vermont Higher Education Investment Plan (VHEIP).

Earnings Can Grow Federal and Vermont Income Tax-deferred
When you contribute to VHEIP, your account earnings have the opportunity to grow federal and Vermont income tax-deferred until withdrawn.

Contributions and Earnings Used to Pay for Qualified Higher Education Expenses Are Federal and Vermont Income Tax-Free
Contributions and earnings on any portion of distributions used to pay for qualified higher education expenses will be free from federal and Vermont income tax. This federal income tax-free treatment of qualified withdrawals and other federal tax benefits are now permanently in place for 529 plans through the passage of the Pension Protection Act of 2006.

Vermont Income Tax Credit
A Vermont taxpayer (or, in the case of a married couple filing jointly, each spouse) is eligible for a nonrefundable income tax credit (i.e., only available for those with a tax liability) of 10% of the first $2,500 per beneficiary contributed to VHEIP in each taxable year (i.e., a nonrefundable income tax credit of up to $250 per taxpayer per beneficiary). Rollovers from another state's qualified tuition plan into VHEIP are also eligible for this income tax credit. Pursuant to the Vermont Department of Taxes Technical Bulletin (TB-33), rollovers from another state's qualified tuition plan into the VHEIP are eligible for the income tax credit to the extent the amounts were previously contributed to the other plan and provided the funds remain in VHEIP for the remainder of the taxable year in which the funds were rolled into VHEIP.

A Vermont taxpayer who previously received this tax credit must repay five percent (5%) of any distribution from an Account, up to a maximum of the total tax credits received by the taxpayer, if the taxpayer makes a non-qualified withdrawal or withdrawal resulting from the death or disability of, scholarship award to, or attendance at one of the Military Academies by the beneficiary of a VHEIP account. A taxpayer will make such repayment to the Vermont Department of Taxes through the filing of the taxpayer's State of Vermont income tax returns.

Federal Estate and Gift Tax Benefits
Contributions to VHEIP may reduce the taxable value of your estate. Contributions to VHEIP, together with all other gifts from the account owner to the beneficiary, may qualify for an annual federal gift tax exclusion of $12,000 per donor per beneficiary for 2008. If an account owner's contribution to a VHEIP account for a beneficiary in a single year exceeds $12,000, the account owner may elect to treat up to $60,000 of the contributions, or $120,000 for joint filers, as having been made over a period of up to five years for federal gift tax exclusion.