Act now to save money when filing your 2022 tax return next year

Thanks to a new law enacted by the Delaware General Assembly, Delaware taxpayers have new opportunities to save money.

Delawareans who save for school with the DE529 Education Savings Plan may qualify for a new tax deduction on their state returns.

“While our office oversees the management of the State’s investment portfolios, we also administer the DE529 Education Savings Plan which allows people to invest in the future of their loved ones,” said State Treasurer Colleen Davis. “Implementing a new tax deduction for DE529 contributions strengthens our commitment to helping people achieve a quality education without facing the possibility of years of student loan payments.”

Delaware tax filers are now eligible to deduct up to $1,000 of contributions to DE529 Education Savings Plans each year on their Delaware tax return (or $2,000 for joint returns) with a few additional conditions.

The deduction will NOT be available for:

• Tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school
• Individuals with a federal adjusted gross income greater than $100,000 (or $200,000 for joint returns).

“The Department of Finance is pleased to announce that this tax benefit will be available for qualifying contributions made throughout 2022,” said Secretary of Finance Rick Geisenberger. “With the completion of a newly launched personal income tax module of the State’s Integrated Revenue Administration System (IRAS), considerable programmatic changes were made to enable administration of this new tax benefit for qualifying 2022 tax filers.” Official notice of the “go-Live” for these technology updates was published to the December 2022 Register of Regulations, thereby allowing the tax deduction for qualifying contributions to DE529 Education Savings Plans made after December 31, 2021.

The passage of House Bill 145 earlier this year also creates a tax deduction for contributions to a DEPENDABLE account for people with disabilities. The deduction applies to any amount up to $5,000 ($10,000 for couples filing a joint return).

“DEPENDABLE allows individuals with disabilities and their families save money above the $2,000 threshold that jeopardizes state and federal means-tested benefits,” said Treasurer Davis. “DEPENDABLE accounts allow people with disabilities to be able to work, able to save, and able to thrive.”

Those without a DE529 Education Savings Plan or DEPENDABLE account can take advantage of the tax deductions by opening accounts today at 529.delaware.gov or able.delaware.gov.

August marks “ABLE to Save Month,” and Delaware State Treasurer Colleen Davis wants to use the opportunity to celebrate Delawareans with disabilities and the freedom, independence, and possibilities their ABLE accounts provide.

ABLE (Achieving a Better Life Experience) plans allow individuals with disabilities and their families to save for a broad range of expenses on a tax-advantaged basis without jeopardizing their benefits from supplemental security income (SSI), Medicaid and other state and federal programs.

“Since taking office, I have focused on three main priorities: bolstering retirement security and readiness, creating pathways to economic empowerment, and promoting a culture of financial excellence,” Treasurer Davis said, “and it’s important to remember those are my priorities for all Delawareans, including those with disabilities. I’m proud that our own ABLE program, DEPENDABLE, provides a way for those with disabilities to save for the future.”

People with disabilities who receive SSI benefits may not have more than $2,000 to remain eligible for SSI and Medicaid. This limitation makes it difficult for many people with disabilities to live the independent lives they deserve and desire.

“A DEPENDABLE account offers solutions that empower our most vulnerable residents to make long-term planning decisions,” Davis said. “The ability to save creates independence by promoting the importance of financial wellness.”

As of June 30, 2022, DEPENDABLE held 242 funded accounts with assets totaling more than $2.1 million.

In addition to the existing benefits of a DEPENDABLE account, Delawareans who save with DEPENDABLE now also receive a deduction on their state income tax.

“A new law passed by the General Assembly establishes a tax deduction of up to $5,000 ($10,000 for couples filing a joint return) for contributions to DEPENDABLE accounts,” Davis said. “I thank the members of the General Assembly and Governor Carney for joining me in helping people with disabilities and those that support them.”

For more information about DEPENDABLE, visit able.delaware.gov, or visit the National Association of State Treasurers to learn more about ABLE Savings Plans.

With the signing of House Bill 145, Delawareans who make contributions to DE529 Education Savings Plan accounts, or DEPENDABLE accounts, will be eligible for a deduction from their federal adjusted gross income (AGI) when filing their income taxes.

“Creating pathways to economic empowerment remains one of my top priorities for our office,” said State Treasurer Colleen Davis.” There’s no better way to create that safeguard than by saving, be it for education or the future needs of a person with a disability.”

The new law creates a tax deduction for any amounts up to $5,000 ($10,000 for couples filing a joint return) contributed to a DEPENDABLE account, and a similar deduction of up to $1,000 ($2,000 for joint returns) into the DE529 Education Savings Plan.

“DEPENDABLE is Delaware’s own ABLE (Achieving a Better Life Experience) program that allows individuals with disabilities and their families to save for a broad range of expenses on a tax-advantaged basis without jeopardizing their state or federal benefits,” Davis said. “There’s no limit to what people with disabilities can do so there’s no reason to limit their savings. This new tax deduction will help them save even more.”

The deduction will take effect for contributions made after December 31, 2021, by the account owner or anyone else.

A new deduction will also become available for contributions to DE529 Education Savings Plan accounts in some cases. Federal adjusted gross income will be reduced for any contribution up to $1,000 (or $2,000 for joint returns) with a few conditions.

The deduction will NOT apply to:

• Tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school
• Individuals with a federal AGI greater than $100,000 (or $200,000 for joint returns).

Deductions for couples with an AGI below $200,000 are capped at $2,000.

The deduction for contributions to DE529 Education Savings Plan accounts takes effect on January 1st of the calendar year following notification from the Delaware Secretary of Finance to the Register of Regulations of the availability of the funds.

“A college degree should come with pride, joy, and hope for the future, not fear and worry over future student loan payments,” Davis said. “Incentivizing Delawareans with this additional tax benefit will hopefully increase their saving and reduce future debt.”

The Delaware Plans Management Board administers both DEPENDABLE and the DE529 Education Savings Plan. Board Chair Donna Vieira, executive vice president and chief commercial officer for Sallie Mae, sees the deductions as another valuable tool.

“A primary goal of the Plans Management Board is making saving a priority for Delawareans,” Vieira said. “I commend Treasurer Davis and members of the General Assembly for showing their commitment to the financial wellness of families up and down our state.”

“If a parent contributes just $1,000 a year to a 529 account beginning the year the child is born, the account could grow to $44,000 by the time the child turns 18,” said Rep. Krista Griffith, prime sponsor of the legislation. “Thanks to HB 145, more working families will be able to provide their kids with a nest egg for their education. It will also go a long way in supporting those in the disability community by allowing up to $5,000 in tax deductions for ABLE accounts.”

“Putting aside money for the future can be an incredibly difficult proposition for many working families,” said Sen. Trey Paradee, the Senate prime sponsor of HB 145. “Parents saving for college or putting money away to secure a stable future for their child with disabilities deserve our support. I want to thank Treasurer Colleen Davis for all of her hard work on getting this bill passed and a big thank you to Governor John Carney for signing this important legislation into law.”

Campaign comes on the heels of record setting effort

To encourage people with disabilities to save for their futures, State Treasurer Colleen Davis is recognizing August as #ABLEtoSave Month, an effort to educate people with disabilities about the importance of opening ABLE (Achieving a Better Life Experience) accounts.

ABLE accounts are tax-advantaged savings accounts that allow individuals with disabilities to save for a broad range of expenses without jeopardizing their benefits from supplemental security income (SSI), Medicaid and other federal or state programs.

The primary goals of #ABLEtoSave are to increase awareness about ABLE accounts and to accelerate the amount of ABLE accounts opened in Delaware and across the country.

“There is no limit on what people with disabilities can do, so there’s no reason their ability to save should be limited,” said Treasurer Davis. “Since the creation of DEpendABLE, Delaware’s own ABLE program two years ago, some of the state’s most vulnerable citizens have gotten some security for tomorrow without affecting the services they need today.”

Just last month, nine new DEpendABLE accounts were opened, the highest one-month total since the plan began. To date, there are 95 funded DEpendABLE accounts representing $817,000 in total assets.

“We’re going to do everything we can to inform plan participants about ways to save and educate those who haven’t opened an account as to why they should during #ABLEtoSave Month,” Davis said. “Our goal is to have 100 DEpendABLE accounts by the end of the campaign.”

“Putting aside money for the future can be difficult for anyone, but especially for people with disabilities. That’s why I co-sponsored the Delaware ABLE Act, which today is helping some of our most vulnerable residents build a savings account without jeopardizing their disability benefits,” said Senate Majority Leader Nicole Poore (D – New Castle). “Best of all, Delaware allows friends and family to contribute to those accounts as well. If you’re the parent of a child with disabilities, I strongly encourage you to help them build some financial security and give yourself some peace of mind by opening an ABLE account today.”

“A disability should never preclude someone from enjoying a financially secure future,” said Sen. Trey Paradee (D – Dover). “But for our most vulnerable citizens, traditional savings accounts can put their disability benefits at risk. The DEpendABLE program offers a great solution that empowers our most vulnerable residents to make long-term planning decisions with the money they can put away in a tax-advantage account. Those funds also can be accessed for disability expenses, education and housing at any time without penalty. I encourage families to learn more about this powerful savings tool.”

“An ABLE account is a great resource for individuals with disabilities to save money for care they may need. I highly recommend those who qualify to check out the program and open an account,” said Senator Brian Pettyjohn (R – Georgetown).

“I know firsthand the complex financial challenges that confront families who have a loved one with special needs,” said State Representative Krista Griffith (D – Fairfax). “ABLE accounts can be a simple but powerful tool to help families address these challenges. And that’s why I opened an ABLE account for my son, Nate. I encourage Delawareans who have a disability or who are helping someone with a disability to explore the potential benefits of a Delaware ABLE account.”

State Rep. Kevin Hensley (R – Middletown) said, “As a co-sponsor of the original bill creating the ABLE accounts and as the father of an adult daughter with intellectual disabilities, I am a strong proponent of participation in this savings fund. In fact, my daughter, Jules, has set up our own ABLE account. If you or your family member is a person with disabilities, this is one of the best investments that can be made in your/their future.”

For more information about DEpendABLE, visit able.delaware.gov.

Delaware State Treasurer Colleen Davis is calling on Congress to expand eligibility for the Achieving a Better Life Experience (ABLE) Act.

Both the United States Senate (S. 651) and House of Representatives (HR. 1814) introduced bills to increase the age of onset for individuals with disabilities, allowing them and their families to establish tax-advantaged savings and investments.

Currently, a person can open an ABLE account if his or her disability began before the age of 26. If passed and signed into law, the ABLE Age Adjustment Act will raise the age-of-onset to 46 years old and increase the eligible participants by 6 million Americans.

“Thanks to the passage of the ABLE Act in 2014, individuals with disabilities can save for a broad range of expenses on a tax-advantaged basis without jeopardizing their benefits from supplemental security income (SSI), Medicaid and other federal or state programs,” said Treasurer Davis, “but those accounts can only be opened for those with early onset disabilities. Unfortunately, accidents, and debilitating medical issues, and many other unforeseen issues can take place after someone’s 26th birthday.”

As of the end of June, DEpendABLE, Delaware’s own ABLE program, had a total of 87 funded accounts and $753,000 in total assets. That represents 87 Delawareans who can earn and save money above current means-tested asset limits without losing their benefits.

Treasurer Davis and Daniel Madrid, Program Manager for DEpendABLE, joined colleagues from around the country this week in signing a letter to the Congressional Military Family Caucus that expressed the importance of support, especially for active military members facing the danger of injury, as well as disabled military veterans.

“We need congress to step up and help not only these brave men and women of the military who put their lives on the line for us, but every person living with a disability,” Treasurer Davis said. “I’m grateful and proud of Delaware’s lone Representative Lisa Blunt Rochester for co-sponsoring the legislation in the House, and for Senator Tom Carper agreeing to be a co-sponsor of the Senate bill. Senator Chris Coons told me he is supportive of our efforts and is considering working to raise the upper age for ABLE Act eligibility.

Opening a DEpendABLE account is easy and can be done online with as little as $25. Go to delawareable.com to enroll.