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Committee hears bill to limit Missouri 529 tax deduction to MOST plan; Treasurer urges keeping dollars in-state
Summary
A hearing on House Bill 1272 sought to limit Missouri tax deductions for 529 college savings contributions to Missouri’s MOST 529 plan. State Treasurer Vivek Malik testified in support, citing figures that about $398 million in deductions were claimed statewide and that roughly $40 million flowed to other states.
Representative (sponsor) introduced House Bill 1272, a proposal to restrict Missouri state tax deductions for 529 college savings contributions so that the deduction would apply only to contributions made to Missouri’s MOST 529 plan.
The sponsor told the committee the change is intended to keep Missouri tax incentives and the resulting economic benefits inside the state. The sponsor said that while the current policy—allowing deductions for any state’s 529 plan—was intended to provide flexibility, it had the unintended effect of subsidizing other states’ plans.
State Treasurer Vivek Malik testified in support. Malik said keeping the deduction limited to Missouri’s MOST 529 plan would strengthen the in‑state plan by increasing assets under management, which could reduce fees and expand investment options for Missouri families. Malik gave the committee figures he said were from 2023: Missouri taxpayers received approximately $398,000,000 in tax exemptions for 529 contributions, while roughly $358,000,000 of contributions were made into Missouri’s MOST plan, leaving about $40,000,000 that flowed to out‑of‑state plans (roughly 10%). He also reported that the MOST plan held approximately $4,500,000,000 in assets and said nearly all beneficiaries are in Missouri.
Malik testified that restricting deductions to the MOST plan would also simplify administration for the Department of Revenue and noted a recent federal change he said allows certain rollovers from 529 plans into Roth IRAs under conditions (he cited a $35,000 rollover cap and an account‑age requirement of 15 years).
Committee members asked whether restricting the deduction would prevent students from attending out‑of‑state colleges (it would not), how the MOST plan’s performance compares with other states’ plans (the sponsor deferred to witnesses), and whether the change would increase the existing tax benefit (sponsor deferred to the State Treasurer). The committee heard no testimony in opposition.
The record shows the bill received public support from the State Treasurer and committee members asked clarifying questions; no committee vote on HB 1272 was recorded in the transcript.
