Whether you are outside to enjoy the heat or inside to avoid the humidity, the summer of 2023 is the perfect time to level up your higher education savings with Ohio’s 529 Plan, CollegeAdvantage. If you’d like to start thinking about on how much you’d like to set aside in Ohio’s 529 Plan for your children’s future higher education, our online tools can help to start to shape your college savings plan. If you’d like some additional saving guidance, here are some ideas and steps you can take this summer to fund your Ohio 529 account.
Save with Ohio’s Sales Tax Holiday
Does your child’s upcoming school year supply list seem to go on and on? The State of Ohio wants to help with a sales tax holiday weekend. During this weekend, take advantage of the back-to-school sales. You can then deposit those extra savings into your child’s 529 plan to continue supporting their future higher education.
Ohio’s 2023 sales tax holiday weekend starts at 12 a.m. Friday, Aug. 4, and ends at 11:59 p.m. Sunday, Aug. 6. School supplies priced at $20 per item or less; school instructional material at $20 per item or less; and clothing priced at $75 per item or less are all exempt from sales and use tax.
According to the Ohio Department of Taxation, school instructional materials are reference books, reference maps and globes, textbooks and workbooks. These items are considered school supplies: binders; book bags; calculators; cellophane tape; blackboard chalk; compasses; composition books; crayons; erasers; folders (expandable, pocket, plastic, and manila); glue, paste, and paste sticks; highlighters; index cards; index card boxes; legal pads; lunch boxes; markers; notebooks; paper; loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper; pencil boxes and other school supply boxes; pencil sharpeners; pencils; pens; protractors; rulers; scissors; and writing tablets.
School supplies do not include any items purchased for use in a trade or business.
If you have any additional questions about the sales tax holiday, the Ohio Department of Taxation has answers on their FAQ page.
The sales tax holiday is a great “money moment” to teach your children about delayed gratification, a valuable life skill. If you give your children a certain amount of dollars to buy their own school supplies, including clothes, then this can be a lesson on how to stretch their dollars. Look for the current prices of items for the upcoming school year. Next, figure out the sales tax—Ohio’s sales tax rate is 5.75%—for these items. Then you can look to see if the stores will discount these items’ prices during the sales tax holiday in order to sell more merchandise. Therefore, if your child can wait for the sales tax holiday, then they can potentially save money two different ways—with potential lower prices and no sales tax. Together, you can figure out much those savings would be so your child can see the real monetary benefit of waiting to buy the items. You can also talk about saving the extra funds in their Ohio 529 higher education savings account. You can add a little extra encouragement to save by matching the funds they add to their future education.
Save with disappearing expenses
Since you’ve taken advantage of Ohio’s sales tax holiday, there are more ideas to build the savings in your Ohio 529 account, including disappearing expenses.
Disappearing expenses are those costs that are temporarily part of your family’s budget. For instance, a large disappearing expense for most families is preschool. Once your child starts all-day kindergarten or first grade, you can turn the former preschool, day care, or summer camp costs into regular contributions to your 529 college savings account. This way, you can continue to support your child’s educational needs into the future. Other disappearing expenses in your budget when your child is a baby or toddler are formula and diapers. Once your child has outgrown the need for those items, you can pool those funds and add them to a 529 account.
Disappearing expenses can also include car loans, medical or dental bills, credit card debt, or, perhaps more relevantly, your own student loan payments. Once you have paid off these obligations, re-direct those dollars from your budget to your child’s 529 plan. As these costs are already in your household’s budget, there is no loss of income with changing them into Ohio 529 contributions.
Save with automatic contributions
Another simple and easy way to build up your 529 savings is through automatic recurring contributions. With it, you can pay yourself then your child’s future higher education first, rather than trying to contribute whatever dollar amount is left from your paycheck. You can set these automated deposits according to your paydays or a monthly contribution schedule. Even small contributions to of your 529 account can add up to big savings.
Some employers also offer payroll direct deposit, where a portion of your after-tax paycheck is deposited directly into your CollegeAdvantage Direct 529 account. To learn more about setting up payroll direct deposit, this article will guide you through the simple steps to take. Payroll contributions makes it easy to save regularly to meet college-saving goals.
Save with Upromise
Ohio’s 529 Plan has partnered with Upromise* to help you save for your child’s higher education costs while shopping. Upromise is a free rewards program that offers its members cash back as you shop online, dine out, buy groceries, and book flights and hotels. If you sign up with Upromise now, you can receive a $5.29 bonus. Additionally, you can earn another $25 in bonus rewards when you link your account with Ohio Direct 529 Plan. Once you reach $50 in your Upromise account, you can transfer those funds to your Ohio CollegeAdvantage Direct 529 account.
To see how Upromise can help build your Ohio 529 college savings account, a long-time CollegeAdvantage family shared their Saving Story on how Upromise added to their son’s Ohio 529 account.
Save with loved ones’ contributions
Family and friends want to celebrate the big events in your child’s life. If they ask for gift ideas, share that they can help with another big milestone in your child’s life – their higher education —with a contribution to their 529 account. With Ugift, it’s simple for anyone to contribute to your CollegeAdvantage Direct 529 Plan account. To get a Ugift code to share with your loved ones, log in to your Ohio529 account and click on Ugift. This code allows others to make online contributions to your 529 plan without needing the actual account number. With the Ugift code, friends and family can visit Ugift529.com to make their electronic contribution from their bank account. The gift giver can make one-time or recurring contributions at any time. And if they are an Ohio taxpayer, they can deduct their contributions up to $4,000 from their state taxable income.
It's Never Too Late To Start Saving
If you haven’t started to save for college costs, it’s never too late to open an Ohio’s 529 Plan. Every dollar saved is a dollar that isn’t borrowed. This makes a 529 college savings plan an excellent alternative to student loan debt. Even small 529 plan deposits can grow through the power of compound interest, tax-free earning, and tax-free withdrawals for qualified higher education expenses. If you have been saving in a 529 plan, take these additional steps and watch how your account grows!
Ohio’s tax-free 529 Plan can be used nationwide for whatever comes after high school, including federally accredited apprenticeships, trade and vocational schools, community colleges, certificate programs, four-year universities and colleges, graduate school, law school, and medical school. A 529 account can be used for whatever school comes after high school for your child. Learn, plan, and start with Ohio’s 529 Plan today at CollegeAdvantage.
This article was originally posted in July 2020 and has been updated to reflect new information for 2023.
* Upromise is an optional program offered by Upromise, LLC, is separate from the Ohio's 529 Plan, CollegeAdvantage, and is not affiliated with the Ohio's 529 Plan. Separate terms and conditions apply to the Upromise program, and you will be required to read and agree to them at sign-up. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to an Ohio's 529 Plan, CollegeAdvantage account are subject to a $50 minimum.
Upromise and the Upromise logo are registered service marks of Upromise, LLC.