Tax Advantages

North Carolina's National College Savings Program Gives You Real Tax Advantages.
Account earnings in NC's 529 plan are free from federal and, if you are a resident of NC, North Carolina income taxes when you use the money to pay for qualified education expenses.
Withdrawals for qualified education expenses are exempt from both NC and federal income taxes. If your beneficiary receives a scholarship or attends a U.S. military academy, withdrawals for an amount not more than the scholarship or for an amount not more than the cost of advanced education at a U.S. military academy are without penalty; however, the earnings portion of these types of withdrawals are subject to federal and may be subject to state income taxes.

See the Program Description for more detail on types of withdrawals and tax implications.

Remember, your savings can pay for tuition and expenses at virtually any college anywhere.

The features of a qualified tuition program are complex and involve significant tax issues. The earning portion of withdrawals not used for qualified higher education expenses are subjected to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax benefits may be contingent on meeting other requirements.