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529 plans in 2026: contribution limits and taxes
A 529 college savings plan offers a tax-advantaged way to set aside money for college and other future education costs. To make the most of this important tool, it’s essential to understand the contribution limits, rules, and tax benefits that come with it.
What is a 529 plan?
A 529 plan is a tax-advantaged account designed to help families prepare for the high-cost of a college education. Run by states or specific colleges and universities, these plans allow contributions to grow tax-deferred over time, and withdrawals are tax-free when used for qualified education expenses.
Who can contribute to a 529 plan?
Once the plan is set up, almost anyone—a parent, relative, or family friend—can invest in a 529 and help fund a child’s education. In fact, contributions to a 529 plan can make a great gift—especially early in a child’s life.
What investments are available in a 529 plan?
Investment options vary by plan but often include mutual funds and ETFs. Depending on your goals and risk tolerance, you can choose funds focusing on equities, fixed-income securities, or even target-date portfolios that adjust their allocation based on your child’s anticipated enrollment. Keep in mind that all investments may fluctuate based on market conditions and fees differ by plan. Be sure to evaluate your options carefully.
Making 529 plan contributions
Contributing to a 529 is pretty simple. You can write a check, transfer funds electronically, or even set up regular contributions from your paycheck. Some plans allow you to contribute as little as $50 to get started, and if you set up automatic monthly contributions, opening amounts may be even lower.
529 plan contribution limits for 2026
Unlike 401(k)s, IRAs and other tax-advantaged accounts, there are no annual contribution limits on 529 plans. It’s important to remember, however, that contributions to a 529 plan are considered gifts for federal income tax purposes. Since the gift tax exclusion is $19,000 for single filers and $38,000 for married couples filing jointly in 2026, contributors will need to stay under that threshold if they want to avoid this tax.
Note: Some states impose lifetime contribution limits on their 529 plans, however most people will never need to reach these levels.1
529 plan lifetime contribution limits by state³
|
$475,000 |
|
|
$550,000 |
|
|
$590,000 |
|
|
$500,000 |
|
|
$529,000 |
|
|
$500,000 |
|
|
$550,000 |
|
|
$350,000 |
|
|
$418,000 |
|
|
$235,000 |
|
|
$305,000 |
|
|
$500,000 |
|
|
$500,000 |
|
|
$450,000 |
|
|
$420,000 |
|
|
$501,000 |
|
|
$450,000 |
|
|
$500,000 |
|
|
$545,000 |
|
|
$500,000 |
|
|
$500,000 |
|
|
$500,000 |
|
|
$425,000 |
|
|
$235,000 |
|
|
$550,000 |
|
|
$396,000 |
|
|
$500,000 |
|
|
$370,000 |
|
|
$596,925 |
|
|
$305,000 |
|
|
$500,000 |
|
|
$520,000 |
|
|
$550,000 |
|
|
$269,000 |
|
|
$541,000 |
|
|
$450,000 |
|
|
$400,000 |
|
|
$511,758 |
|
|
$520,000 |
|
|
$540,000 |
|
|
$350,000 |
|
|
$350,000 |
|
|
$500,000 |
|
|
$574,000 |
|
|
$550,000 |
|
|
$550,000 |
|
|
$500,000 |
|
|
$500,000 |
|
|
$550,000 |
|
|
$567,500 |
|
|
N/A |
Are 529 plan contributions tax-deductible?
As far as federal income taxes go, the answer is no. While earnings grow tax-deferred and withdrawals are tax free (if the money is used to pay qualified education expenses), contributions do not get any special tax treatment. On a state level, however, contributions may qualify for state income tax deductions or credits (see below).
529 plan tax benefits by state
Thirty-seven states and the District of Columbia offer tax benefits for 529 plan contributions. Most states allow taxpayers to deduct all or part of their contributions to in-state plans, while Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio, and Pennsylvania extend these benefits to contributions made to any 529 plan. Indiana, Oregon, Utah, and Vermont provide tax credits instead of deductions, and Minnesota offers either a deduction or credit based on adjusted gross income.3
How much should I invest in a 529 plan?
The amount you should save depends on what you expect your child’s education to cost. Factors like the type of school (public vs. private, in-state vs. out-of-state) and the level of degree pursued (2 -year degree, 4-year degree, MA, PhD) play a big role. Since your child may qualify for scholarships and other types of aid, a good starting point might be to save about one-third of the estimated cost.
Related: How much do I need to save for college?
How much do I need to start a 529 plan?
One of the great things about 529 plans is that you can usually start small. Many plans allow you to open an account with as little as $50—sometimes less if you sign up for automatic monthly contributions. Either way, it doesn’t take much to get things going.
Related: How to Open a 529 Account
How much should I save in a 529 plan by age?
Here again, the amount you need to save depends on a host of factors. As a result, The College Investor has created a chart that provides a range of savings goals (from lowest to highest) that you can use as a general guideline.4
|
$1,189 |
$7,816 |
|
|
$2,451 |
$16,144 |
|
|
$3,791 |
$24,923 |
|
|
$5,213 |
$34,276 |
|
|
$6,723 |
$44,206 |
|
|
$8,327 |
$54,749 |
|
|
$10,029 |
$65,941 |
|
|
$11,836 |
$77,824 |
|
|
$13,755 |
$90,440 |
|
|
$15,792 |
$103,834 |
|
|
$17,955 |
$118,054 |
|
|
$20,251 |
$133,151 |
|
|
$22,689 |
$149,179 |
|
|
$25,277 |
$166,196 |
|
|
$28,025 |
$184,263 |
|
|
$30,942 |
$203,444 |
|
|
$34,039 |
$223,807 |
|
|
$37,328 |
$245,427 |
529 plan withdrawal rules
To get the most out of your 529, withdrawals should only be made for qualified educational expenses. Keep all records and receipts for tax purposes, and bear in mind that the most you can withdraw is the total cost of attending the school, minus any grants, scholarships, and tax-free assistance your child receives. If you are applying the money to K-12 tuition, however, the yearly maximum is $20,000 (as of 2026).5
What expenses qualify for tax-free distributions?
In most cases, the following educational expenses qualify for tax-free 529 withdrawals:
- Tuition for colleges or universities
- Tuition at trade schools
- Postgraduate or doctorate program
- Up to $10,000 per year for private or public K-12 tuition
- Room and board (up to a limit)
- College class fees
- Books, computers, and materials
What happens if a withdrawal does not qualify?
While many costs—such as insurance payments, travel expenses, smartphones, and gym memberships—may seem like educational expenses, they often do not qualify. If you make an unqualified withdrawal, it will be taxed as income and it may be subject to a 10% penalty. If you have any questions about an expense, be sure to consult a tax professional or financial professional.
When should you withdraw funds from a 529 plan?
While you can technically withdraw funds anytime, you should always withdraw the funds in the year that you paid for the qualified expenses. For example, if you pay for the second semester of a school year in December, even if the classes don’t start until January, that amount is subject to the previous year’s withdrawal calculation.
If you would like to set up a 529 college savings plan, our experienced financial services professional can help. We offer plans for 26 different states and can help you choose the one that best suits your and your beneficiary’s needs.
Contact a NYLIFE Securities Registered Representative
A New York Life financial professional can help determine what’s right for you.
Related Content
1“529 Contribution Limits 2025: Maximums by State, Gift Tax Exclusion, and More,” Saving for College.com, May 30, 2025
https://www.savingforcollege.com/article/maximum-529-plan-contribution-limits-by-state
2“529 Plan Contributions Limits for 2025,” NerdWallet.com, May 28. 2025
https://www.nerdwallet.com/article/investing/529-contribution-limits
3“Are 529 Contributions Tax-Deductible? State-by-State Guide and What It’s Worth,” Saving for College.com, May, 23, 2025
https://www.savingforcollege.com/article/how-much-is-your-state-s-529-plan-tax-deduction-really-worth
4“How Much Should You Have in a 529 Plan by Age,” The College Investor, September 25, 2024
https://thecollegeinvestor.com/16964/how-much-you-should-have-in-a-529-plan-by-age/?srsltid=AfmBOoo1DggHj5we-NHZ4IEtWQYI4XDCx1poiE_GgJzXDkM6M7fOBTqS
5“Federal changes to qualified educational expenses,” my529.org,
https://my529.org/2025/07/federal-changes-to-qualified-education-expenses/
Investments are offered through NYLIFE Securities LLC (member FINRA/SIPC), a Licensed Insurance Agency and a New York Life company.