Education Savings Account Recapture Tax

If you own an education savings account (529 plan) and use a withdrawal for anything other than qualified higher education expenses, you may need to pay an additional recapture tax to Minnesota.

Do I need to pay this recapture tax?

You must pay this tax if both of the following apply:
  • You claimed an Education Savings Account Contribution Subtraction or Credit for contributions to a 529 plan.
  • A Minnesota distribution is taken from the 529 plan and used for nonqualified expenses.

What are nonqualified expenses?

Nonqualified expenses are any expenses other than those to attend a post-secondary educational institution. Expenses used for K-12 education are considered nonqualified expenses.

How do I report this recapture tax?

Enter your additional tax on Form M1, Individual Income Tax, when you file your Minnesota income tax return.

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