|I know that qualified withdrawals from college savings
plans are now exempt from federal income tax. But what about state taxes?|
Although qualified withdrawals from college savings
plans won't be taxed on your federal income tax return, state income tax
treatment may differ. Some state income tax benefits (e.g., tax-free treatment of
qualified withdrawals, tax deduction for contributions) may be provided only to state residents who
invest in their state's 529 plan. You'll need to check the laws of your state.