529 Plan College Savings
Calculator 2026

A 529 Plan is a state-sponsored, tax-advantaged investment account under IRC §529 for qualified education expenses. Contributions grow tax-deferred federally; withdrawals for qualified education expenses are tax-free.

Two types: (1) College Savings Plans (most common) — invest in mutual fund-like portfolios, returns market-based. (2) Prepaid Tuition Plans — lock in current tuition rates at specific schools; only some states offer one, and not every prepaid plan is open to new enrollment, so check your state's plan. Account owner controls funds (not the beneficiary).

Beneficiary can be changed to another qualifying family member at any time without penalty. No federal contribution limit; each state plan sets its own maximum aggregate balance per beneficiary.

Federal tax-free withdrawal allowed for: (1) Tuition and required fees at any eligible institution (US accredited college, university, vocational school, AND many foreign schools). (2) Room and board (if enrolled at least half-time) — capped at school's published cost of attendance for that category. (3) Required books, supplies, and equipment. (4) Computers and required software (added by PATH Act 2015). (5) K-12 expenses at any public, private, or religious elementary or secondary school, up to $20,000 per year per beneficiary from 2026 (was $10,000; TCJA 2017 added tuition, and the 2025 tax law, Pub. L. 119-21 §70413, doubled the cap for tax years beginning after 31 December 2025).

Since 5 July 2025 this covers not just tuition but curriculum and curricular materials, books and instructional materials, online educational materials, outside tutoring by a qualified unrelated tutor, standardized-test and AP/college-admission exam fees, dual-enrollment fees, and educational therapies for students with disabilities. (6) Apprenticeship program expenses (SECURE Act 2019), and recognized postsecondary credential programs — tuition, fees, required testing and continuing education (Pub. L. 119-21 §70414). (7) Up to $10,000 lifetime principal+interest on student loans of the beneficiary or beneficiary's siblings (SECURE Act 2019).

State tax treatment may differ — some states limit qualified expenses to higher education only.

Contributions are NOT federally tax-deductible (state deductions vary widely). Earnings grow tax-deferred.

Qualified withdrawals are 100% federally tax-free — no tax on earnings used for qualified education. Non-qualified withdrawals: the EARNINGS portion only is taxed to whoever receives the distribution PLUS a 10% federal penalty (the contributions/principal portion comes out tax-free since you already paid tax on it).

Penalty waived if beneficiary: (a) receives a scholarship (penalty waived on amount up to scholarship value, earnings still taxed); (b) attends US service academy; (c) dies or becomes disabled. State tax treatment varies — some states fully tax non-qualified, others mirror federal rules.

Highly state-specific — the full table for all 50 states and DC is on this page. Of the 51, 34 offer a deduction and 4 a credit (Indiana, Oregon, Utah, Vermont).

Examples: New York $5,000 single / $10,000 MFJ (NY's 529 only); Pennsylvania $19,000 per beneficiary, per taxpayer ($38,000 per beneficiary for a married couple where each spouse contributes and has enough PA income of their own), on contributions to ANY state's 529 — the cap tracks the federal annual gift exclusion; Illinois $10,000 single / $20,000 MFJ (Bright Start, Bright Directions and College Illinois combined); Massachusetts $1,000 single / $2,000 MFJ (Massachusetts plans only). No annual cap at all: New Mexico, South Carolina, West Virginia (in-state plans).

California — HAS a state income tax but offers NO 529 deduction (a 2025 bill to add one, SB 529, died in February 2026), though earnings still grow free of California tax; Hawaii, Kentucky, North Carolina also tax income but give no contribution benefit. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming — no state tax on wage income, so there is nothing to deduct against.

Only Arizona, Kansas, Maine, Minnesota, Montana, Ohio, Pennsylvania accept contributions to any state's 529 at the full limit (Arkansas and Georgia accept other states' plans at a lower limit); elsewhere the deduction requires the in-state plan. Many states 'recapture' the deduction if you withdraw for non-qualified expenses or roll to another state's plan — the table notes each rule.

Yes — IRC §529(c)(2)(B) allows a special election to treat a large 529 contribution as if it were spread over 5 years for gift tax purposes. 2026 superfund limits: $95,000 single donor / $190,000 married filing jointly per beneficiary in one year (5 × annual exclusion $19,000 / $38,000). Lump sum allows immediate market exposure for long-term growth.

Trade-off: if you make ANY other gifts to the beneficiary in the next 4 years, they count against your annual exclusion (which was effectively pre-used). File Form 709 (gift tax return) to make the election even though no gift tax may be due.

Donor cannot make further gifts to the same beneficiary in 4 years without using lifetime exemption. Grandparents commonly use superfunding for college savings without triggering gift tax.

Effective January 1, 2024 — unused 529 funds can be rolled over to a Roth IRA for the same beneficiary. Conditions: (1) The 529 account must have been OPEN for at least 15 years. (2) Rolled funds must have been in the 529 for at least 5 years. (3) Annual rollover is capped at the Roth IRA contribution limit ($7,500 in 2026, $8,600 if 50+). (4) Lifetime cap of $35,000 per beneficiary. (5) The rollover can't exceed the beneficiary's compensation for the year (the normal IRA contribution rule, IRC §219(b)(1)(B)), and it is reduced by any other IRA contributions that year. (6) The Roth IRA income phase-out does NOT apply to these rollovers — IRC §408A(c)(3)(E) lifts it by the rollover amount.

Strategy: parents who overfunded a 529 or whose child got significant scholarships can now redirect to retirement instead of facing 10% non-qualified withdrawal penalty. The rollover counts as 'qualified' — no federal tax or penalty.

Mechanics-based answer (not advice): Account ownership affects financial aid (FAFSA) treatment significantly. (1) Parent-owned 529: counted as parent asset on FAFSA — assessed at maximum 5.64%. Best for ongoing aid eligibility. (2) Student-owned or custodial 529 of a DEPENDENT student: also reported as a PARENT asset — the Higher Education Act counts a 529 designated for a dependent student as the parent's asset regardless of whether the student or the parent owns it (HEA §480(f)(3)). (3) Grandparent-owned 529: NOT reported on the FAFSA at all (only student and parent assets are).

Since the 2024-25 FAFSA, distributions ALSO no longer count as student income (previously assessed at 50% — significant aid reduction). This makes grandparent-owned 529s newly attractive post-2024.

An independent student's own 529 is the student's asset. A plain UGMA/UTMA custodial account (not a 529) remains a student asset.

Multiple owners possible for same beneficiary; each plays a different aid role.

Yes, with no tax consequences if the new beneficiary is a member of the same family. Qualifying family members under IRC §529(e)(2): spouse, child, descendant, sibling, sibling's spouse, parent, parent's sibling, parent's sibling's spouse, niece/nephew, first cousin, in-laws.

First cousins were added to the list by EGTRRA 2001 (Pub. L. 107-16 §402(d)).

Process: account owner contacts plan administrator and submits a beneficiary change form. No federal tax, no penalty.

Useful for: redirecting unused funds from one child to another, family-wide education savings pool, even using leftover funds for parent's continuing education (e.g., a working parent going back for an MBA). Multiple beneficiary changes allowed throughout the account's life.

State tax recapture may apply in some states if you've claimed deductions.

Only the earnings part of a non-qualified withdrawal is taxed. Multiply the withdrawal by the share of the account that is earnings, subtract the part covered by qualified expenses you paid that year, and the rest is added to your income and also charged a 10% additional tax.

A $10,000 withdrawal from an account that is half earnings, in the 22% bracket, costs $500 of penalty plus $1,100 of federal income tax. Source: IRS Publication 970, chapter 7; Form 5329 Part II.

Several options to avoid the 10% non-qualified withdrawal penalty: (1) Change the beneficiary to another family member (sibling, cousin, parent for grad school, etc.) — no tax or penalty. (2) Hold the account — beneficiaries can use funds at any future age (no expiration). (3) Use up to $10,000 lifetime for student loan repayment of beneficiary or sibling. (4) Roll over up to $35,000 lifetime to Roth IRA per SECURE 2.0 (since 2024, 15-year aging requirement). (5) Use for K-12 expenses — tuition, books, tutoring, testing and more — up to $20,000/yr from 2026 (was $10,000). (6) Apprenticeship programs. (7) Last resort: non-qualified withdrawal — earnings taxed + 10% penalty. Scholarship exception waives the penalty on amount up to scholarship value (earnings still taxed).

Coverdell ESA (Education Savings Account, §530): $2,000 annual contribution limit (much smaller than 529), income-phased eligibility (phases out between $95,000 and $110,000 MAGI single, $190,000 and $220,000 joint; not indexed, IRC §530(c)(1)), more investment flexibility (self-directed). Coverdell balances must be distributed within 30 days of the beneficiary turning 30 (special-needs beneficiaries excepted); 529 has no age limit.

UGMA/UTMA (custodial accounts under Uniform Gifts/Transfers to Minors Act): no tax advantage for college specifically, becomes student's property at majority (18-21), counts as student asset (20% on FAFSA), unrestricted use after majority. For pure college savings 529 wins on contribution limits and tax benefits.

UGMA/UTMA fits when funds may be for non-education purposes. Coverdell shines for self-directed K-12 + college small balances.