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A tax deduction of a 529 plan allows families to lessen the levels of taxable income under their state in terms of deductions made to a qualified 529 plan. The federal government does not allow a federal deduction on contributions but numerous states do offer significant tax incentives to citizens who make investment in those plans. This deduction will promote long-term planning and will offer educational savings more accessibly. Also, any earnings made on investments within the plan are tax-deferred and earnings made by withdrawal on qualified education expenses are generally tax-free. When families are aware of deduction limits, eligibility regulations and contribution process of their state, they can make the best of these benefits and develop education savings in the most efficient way.