529 State Tax Recapture Exposure Calculator

Estimate the state taxes and penalties you may owe when using 529 dollars for non-qualified purposes by pairing prior state deductions with the taxable portion of your withdrawal.

Total 529 contributions you previously deducted on state income tax returns.
Marginal state income tax rate applied when you claimed the deduction.
Portion of the 529 withdrawal not used for qualified education expenses.
Percentage of the withdrawal treated as investment earnings on Form 1099-Q (rest counts as contributions).
Optional — defaults to 0.00%. Enter any extra state penalty applied to non-qualified withdrawals.

State tax rules change frequently. Confirm recapture and penalty requirements with a tax professional before filing.

Examples

  • Example 1 — $15,000.00 deducted, 6.00% state tax rate, $8,000.00 non-qualified use, 40.00% earnings share ⇒ Tax recapture due: $288.00 | State penalty: $0.00 | Total due: $288.00 | Contribution portion taxed: $4,800.00 | Effective rate on withdrawal: 3.60%
  • Example 2 — $22,500.00 deducted, 5.50% tax rate, $12,500.00 distribution, 35.00% earnings share, 2.00% state penalty ⇒ Tax recapture due: $446.88 | State penalty: $250.00 | Total due: $696.88 | Contribution portion taxed: $8,125.00 | Effective rate on withdrawal: 5.58%

FAQ

Do I include scholarship withdrawals?

If you used the scholarship exception, reduce the contribution portion by that amount before entering values so you do not overstate recapture.

How is the earnings share determined?

Refer to the 1099-Q or plan statement, which splits distributions between basis (contributions) and earnings using the IRS pro-rata formula.

What if I redeposit within 60 days?

Most states waive recapture when a rollover is completed within their specified window. Enter zero for the distribution if you redeposit in time.

Does this cover federal penalties?

No. Use this alongside a federal 10% penalty calculator to see your total cost of a non-qualified withdrawal.

How do I treat multiple beneficiaries?

Allocate deductible contributions and withdrawals to each beneficiary before running the calculator so recapture reflects the specific account history for that student.

What earnings share should I use for a partial distribution?

Use the earnings percentage shown on Form 1099-Q for that distribution; if unavailable, apply the IRS pro-rata rule: earnings ÷ account balance before withdrawal.

Additional Information

  • Contribution portion equals the withdrawal amount multiplied by one minus the earnings share from Form 1099-Q.
  • Recaptured tax is capped by the total deductible contributions you previously claimed in that state.
  • Optional penalty applies to the entire non-qualified withdrawal when a state imposes extra percentages.
  • Effective rate expresses the combined tax and penalty as a share of the distribution so you can compare alternatives.
  • Outputs format dollars and percentages with en-US conventions for easy sharing with tax preparers.

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