February 6, 2008
Depositing tax refunds into Bright Start will boost college savings
Illinoisans now able to direct tax refunds automatically into Bright Start
For the first time, Illinois residents can have their income tax refund deposited automatically into
their Bright Start College Savings account when completing their state and federal tax returns,
Illinois State Treasurer Alexi Giannoulias announced today.
In previous years, Illinois taxpayers could only opt to have their tax refunds go directly into their
checking or savings account. This new option makes Illinois the first state in the nation to allow
refunds to go directly into a state-sponsored college saving account, or 529 plan.
“Bright Start works like a 401K that earns you money toward college,” Giannoulias said.
“Depositing your tax refund into your college savings account can add up and result in a significant
If Illinois Bright Start participants deposit their state tax refund (which averages around $250) and
their federal tax refund (which averages around $2,400) annually for 10 years, they could have
approximately $51,000 more to spend on a college education. Assuming an industry standard 8
percent return on investments, the amount would include $17,000 in earnings and $34,000 in
By depositing their tax refunds into their Bright Start account, Illinois residents can then deduct
their refund the following year. In addition, the money earned by investing the deduction will also
be tax exempt.
“Bright Start contributions are always state tax deductible. By putting your tax refund into Bright
Start, you actually increase the amount of the state refund in the years to come,” Giannoulias said.