Are there federal and state tax advantages for opening an account?

When you make contributions to an Embark account, your money has the chance to grow and earn interest, tax-free. And unlike many other investment options, when you withdraw your savings to use for qualified educational expenses, you can spend it tax-free too.

And, if you live in Oregon, any contribution you make to an account makes you eligible for the state’s income tax credit, worth $190 for single filers or $380 for joint filers. You do not need to be the owner of the account to contribute and claim the tax credit (that includes people who send funds through a gifting page).

Worth noting, recapture provisions apply. This means that if you withdrew funds for non-qualified expenses from your Embark account and you claimed a tax benefit for that year’s contribution, the state of Oregon will recapture any Oregon State income tax benefits that you accrued on the principal portion of that withdrawal. This is also the case when funds are withdrawn for the purpose of enrollment or attendance at an elementary or secondary school. Read through our Plan Disclosure Booklet (PDF) for more information.

Additionally, any funds that you plan to roll over from another 529 College Savings Plan are considered new contributions and may impact your taxes in a given tax year. It’s best to contact a tax advisor if you have questions about potential tax implications.