Model tax-free 529 growth and the state deduction that compounds on top.
See your 529 plan grow tax-free over years to enrollment, with state-income-tax deduction value and a side-by-side taxable-brokerage outcome — so the tax advantage is in plain numbers.
Direct answers to the most common questions, in plain language. Skim if you're in a hurry; dig deeper below.
A tax-advantaged investment account for education.
A 529 plan grows tax-free and lets you withdraw tax-free for qualified education expenses. Many states give a state-income-tax deduction or credit for contributions, making it one of the best tax-advantaged accounts.
Up to the gift-tax annual limit per beneficiary per year.
No federal contribution limit, but contributions count as gifts. The 2026 annual gift-tax exclusion is $19,000 per donor per beneficiary. A special "superfunding" rule lets you contribute 5 years at once ($95,000 lump). State plans set total lifetime limits, typically $235k–$575k.
Federally no, but most states offer a deduction or credit.
Federal: no income deduction, but tax-free growth and withdrawals. State: about 30 states offer a state-tax deduction or credit for contributions, typically $5–10k per filer. The state benefit alone often beats other tax-advantaged options.
Transfer to a sibling, use for K-12, or roll up to $35k to a Roth IRA.
Outs include: transfer beneficiary to a sibling or relative, use for K-12 (up to $10k/yr), apply to student loans (up to $10k lifetime), or — under SECURE 2.0 — roll up to $35k lifetime into a Roth IRA after 15 years.
The mechanics in short answers — no jargon, no upsell.
You can use any state's 529, but your home state often offers a tax deduction only for using its own plan. Compare returns and fees, then check the deduction.
Monthly or lump sum, up to your state's annual deduction cap (for state benefit) and the federal gift-tax exclusion (for tax efficiency).
Most 529s offer age-based glide paths — equity-heavy when the child is young, shifting to bonds as enrollment nears. Simple and effective.
Tuition, room and board, books, required computers — all qualified. Travel and health insurance are not. Match withdrawals to expenses in the same year.
Designed so anyone can model their situation in under a minute, with or without a finance background.
See your contributions plus market growth over 18 years.
Estimate the annual state-tax savings.
Side-by-side tax-free 529 vs taxable brokerage outcome.
Test contributions across multiple beneficiaries.
Annual exclusion and superfunding shown in plain numbers.
Final balance projected for the year your child starts college.
Everything you might ask before, during, or after using this tool.
Yes — and grandparent-owned 529s have a tax advantage under current FAFSA rules: distributions aren't reported as the student's income (which would reduce aid). Parent-owned 529s are reported as parental assets (assessed at 5.64% max). Both work; the grandparent version is often slightly better for aid.
State lifetime limits range from about $235,000 to $575,000 per beneficiary. The federal annual gift-tax exclusion ($19,000 in 2026) effectively caps tax-free annual contributions. The superfunding election lets you contribute 5 years at once ($95k single, $190k jointly) without gift-tax consequences.
Start with your own state if it offers a tax deduction worth more than the difference in fees and returns. Otherwise, look at Utah's my529, Nevada's Vanguard plan, and New York's — these are consistently in the top tier for low fees and broad index-fund options.
Yes, to any "member of the family" of the original beneficiary — siblings, cousins, parents, even yourself. No tax consequences. This is one of the 529's most underrated features.
Yes, but modestly. A parent-owned 529 is treated as a parental asset on the FAFSA, assessed at a maximum 5.64%. So $100k in a 529 reduces aid by at most $5,640. Much friendlier than a UTMA, which is treated as the student's asset (20% assessment).
Yes, up to $10,000/year per beneficiary for K-12 tuition. State-tax treatment varies — some states match the federal rule, others claw back the state deduction if used for K-12. Check before withdrawing.
You can withdraw up to the amount of the scholarship without the 10% penalty — but you still pay income tax on the earnings portion. Or you can transfer the funds to a sibling who needs them. Or save for grad school.
Under SECURE 2.0 (effective 2024), you can roll up to $35,000 lifetime from a 529 into a Roth IRA for the beneficiary, subject to annual Roth limits, after the 529 has existed for 15+ years. Great backup if the child doesn't need the money for school.
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About 30 states give a state-income-tax deduction for contributions to their 529. The benefit ranges from $5k to $10k+ per filer per year.
At a 6% state tax rate, a $10k deduction is $600 back. Compounded over 18 years and reinvested, that's easily $1,800+ of extra value per child — for an account you would have used anyway.
Federal gift-tax rules let you treat a single year's 529 contribution as if spread over 5 years — meaning you can contribute up to $95,000 (single) or $190,000 (jointly) in one shot without filing a gift-tax return.
This is the play for grandparents who want to seed a 529 in a single move while staying under gift-tax rules.
Scholarship: withdraw up to the scholarship amount penalty-free (tax on gains still applies).
Service academy or death/disability: penalty waived.
SECURE 2.0 Roth rollover: up to $35k lifetime into a Roth IRA for the beneficiary, after 15+ years.
Transfer to another family member: no tax or penalty.
A UTMA is the child's asset at the age of majority — they can spend it on anything. A 529 stays in your control.
For financial aid: UTMA hurts roughly 4× more than a parent-owned 529 (20% vs 5.64% assessment).
Use a 529 unless you specifically want the money to be spendable on non-education things.
Two short notes worth reading before you trust any number on this page.
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