How to Open a 529 Plan in Maryland: Tax Subtraction and Save4College

To open a 529 plan in Maryland, go to maryland529.com and enroll online in the Maryland College Investment Plan, the state’s only actively enrolling 529 program. The process takes about 15 minutes if you have Social Security numbers for yourself and the beneficiary, a U.S. mailing address, and a bank account for the initial contribution. The minimum to start is $25. Once the account is open, Maryland taxpayers can subtract up to $2,500 per beneficiary each year from state taxable income, and investment earnings grow tax-free when spent on qualified education costs.

Which Maryland 529 Plan You Can Open

Maryland has two 529 programs on paper, but only one accepts new accounts. The Maryland College Investment Plan is a market-based savings account managed by T. Rowe Price, with contributions invested in mutual fund portfolios you select.¹ Balances rise and fall with the markets.

The older Maryland Prepaid College Trust, which let families lock in tuition at current rates, closed to new enrollments on June 1, 2023.² If you’re starting fresh, the College Investment Plan is the only path.

Who Can Open an Account

You can open a Maryland College Investment Plan account if you are at least 18 and have a valid Social Security number or Individual Taxpayer Identification Number. Maryland residency is not required to open the account, but the state tax subtraction is limited to Maryland taxpayers and the Save4College grant is limited to Maryland residents.³ If you live in another state, compare against your own state’s plan, since a home-state 529 may carry tax benefits you’d lose by using Maryland’s.⁴

The beneficiary must have a Social Security number but can be any age. A newborn, a teenager, an adult heading back to school, or yourself all qualify. There’s no deadline for using the money. If you leave Maryland after opening the account, it stays open and usable at any eligible school in the country, though the state subtraction stops applying to future contributions.³

What to Have Ready Before You Start

Gather these for both yourself (the account owner) and the beneficiary before opening the enrollment form:

Full legal name and date of birth for both parties.
Social Security number or ITIN for both parties.
A physical U.S. mailing address for the account owner. Tax documents go there.
Bank account and routing numbers if you plan to fund by ACH transfer.

These identifiers are required under the federal tax code governing qualified tuition programs.⁵ Opening an account for a newborn who doesn’t yet have a Social Security number means waiting for the number to arrive, or opening with a different beneficiary now and changing it later.

Enrolling and Making Your First Contribution

The fastest route is the online enrollment portal at maryland529.com. The system walks you through your personal information, the beneficiary’s details, and your portfolio selection, then asks for a digital signature acknowledging the Plan Disclosure Statement. Once you submit, you get a confirmation with your new account number. If you’d rather use paper, request an Enrollment Kit from the website and mail the completed forms to the address inside.

Funding happens right after submission online. The system pulls your initial contribution from the linked bank account via ACH. For paper applications, enclose a check payable to Maryland 529. The minimum is $25 per portfolio to start, and the same $25 minimum applies to later contributions and to automatic monthly transfers.⁶ Recurring transfers are the simplest way to build the balance without needing to think about it.

Login credentials for the online dashboard arrive within a few business days. From there you can track performance, add money, change beneficiaries, and request distributions when the time comes.

Picking Your Investment Portfolio

During enrollment you choose how contributions are invested. There are two categories:

Enrollment-based portfolios start heavier in stocks when the beneficiary is young and shift toward bonds and money market funds as college approaches. This is the hands-off option and where most new savers land.
Fixed portfolios hold a set allocation of stocks, bonds, or money market funds regardless of the beneficiary’s age. You pick the mix and it stays there until you change it.

Federal law caps investment changes for the same beneficiary at twice per calendar year, so give the initial choice some thought.⁵ If you’re not sure, the enrollment-based portfolio matched to the year your beneficiary will start college is a sensible default. The plan charges no sales commissions, loads, or enrollment fees. Each portfolio carries annual asset-based fees covering the underlying mutual fund expenses and a state program fee; the current schedule is in the Plan Disclosure Statement at maryland529.com.

The Maryland State Income Tax Subtraction

Maryland taxpayers can subtract up to $2,500 per beneficiary per year from state taxable income for contributions to a Maryland 529 plan.⁴ Contribute more than $2,500 to a single beneficiary’s account in one year and the excess carries forward for up to 10 years of future subtractions. The cap is per beneficiary, so a family funding accounts for three children could subtract $7,500 in a single year by contributing $2,500 to each.

Federally, contributions are not deductible, but earnings grow tax-deferred and come out completely free of both federal and Maryland state income tax when used for qualified education expenses.⁴ The longer the money stays invested, the more that tax-free growth matters.

The Save4College State Contribution Program

Maryland residents who meet the income rules can also receive a one-time state grant of $250 or $500 deposited directly into the 529 account. Both the account owner and beneficiary must be Maryland residents, and the account owner must be at least 18.⁷

The 2026 tiers:

Individual income up to $49,999 (joint up to $74,999): $500 grant with a minimum $25 contribution.
Individual $50,000 to $87,499 (joint $75,000 to $124,999): $500 grant with a minimum $100 contribution.
Individual $87,500 to $112,500 (joint $125,000 to $175,000): $250 grant with a minimum $250 contribution.

Income is measured against the prior year’s adjusted gross income. The 2026 application period closes at 11:59 p.m. ET on May 31.⁷ Households above $112,500 individual or $175,000 joint don’t qualify for the grant but can still claim the state income subtraction.

How Much You Can Contribute

There is no annual contribution limit on the account itself, but the combined balance across all Maryland 529 accounts for one beneficiary cannot exceed $500,000. That ceiling includes any remaining Prepaid College Trust balance. Once you hit it, new contributions stop, though investment earnings can still push the balance higher.³

For gift tax purposes, contributions count as gifts to the beneficiary. In 2026 the federal annual gift tax exclusion is $19,000 per donor per recipient.⁸ A married couple can jointly give $38,000 per beneficiary per year without filing a gift tax return. Federal law also allows a five-year election: contribute up to $95,000 at once ($190,000 as a couple) and treat it as spread evenly across five tax years. Grandparents making a lump-sum gift often use this option, though it requires filing IRS Form 709 for the year of the gift and generally rules out additional gifts to the same beneficiary during the five-year window.

What the Money Can Pay For

Withdrawals are tax-free when spent on qualified education expenses. For college and other postsecondary programs, those include:⁹

Tuition and fees at any accredited college, university, or vocational school.
Books, supplies, and equipment required for coursework.
Room and board if the student is enrolled at least half-time, capped at the school’s cost-of-attendance allowance or the actual amount charged by school-operated housing, whichever is greater.
Computers and internet access used primarily by the student while enrolled.
Registered apprenticeship programs certified by the Department of Labor.
Student loan repayment, up to a $10,000 lifetime cap per beneficiary.

For K-12, up to $10,000 per year can go toward tuition at a public, private, or religious elementary or secondary school.⁹ Maryland treats K-12 tuition distributions as tax-free at both the federal and state level.¹⁰

Money pulled out for anything else has consequences. The earnings portion faces federal income tax at your ordinary rate plus a 10% federal penalty.⁴ Maryland also recaptures any state subtractions previously claimed on the amount withdrawn for non-qualified purposes.¹¹ Your original contributions come back tax-free since they went in with after-tax dollars. If the money isn’t needed for the original beneficiary, changing the beneficiary to another qualifying family member avoids these taxes entirely.

1
Maryland 529. Save Your Way – Maryland College Investment Plan
2
Unite529. Maryland Prepaid College Trust Disclosure Statement
3
Maryland 529. Help Center – Section: Investment Plan FAQs
4
Maryland 529. Tax Advantages
5
Office of the Law Revision Counsel. 26 USC 529 – Qualified Tuition Programs
6
Maryland 529. 529 Plan Basics
7
Maryland College Investment Plan. Open an Account
8
Internal Revenue Service. Whats New – Estate and Gift Tax
9
Internal Revenue Service. Publication 970 – Tax Benefits for Education
10
Maryland State Agency. Save for K-12 Education With a Maryland College Investment Plan
11
Maryland 529 Program Information. Tax Consequences of Non-Qualified Distributions