Which States Are The Best & Worst For 529 Plans in 2025?
Colorado, New Mexico, and South Carolina are the best states for 529 plans. They let you deduct every dollar you put into a 529 plan from your state taxes.
Pennsylvania is also great for families. Married couples can deduct up to $30,000 per child from their state taxes.
Some states don’t help at all. California, Delaware, and New Jersey don’t give you any state tax breaks for 529 plans. You can still get federal tax breaks, but these states aren’t as good for saving.
Florida and Texas don’t have state income taxes. Since you don’t pay state taxes there, you can’t get state deductions. But your money still grows tax-free at the federal level.
College costs a lot of money. Saving for it can feel hard and boring. But 529 plans give you tax benefits that help you save more money for college. Most people don’t know these plans exist or how they work.
Each state has different rules for 529 plans. When you understand your state’s rules, you can start saving for your child’s college education right away. You’ll save more money and pay less in taxes. This guide explains what a 529 plan is and how it helps you and your children save money on taxes.
529 Plans: The Basics
A 529 plan is a special savings account for education. The government gives you tax breaks when you use it. Most people use 529 plans to save for college, but you can also use the money for K-12 private school tuition.
There are two types of 529 plans. The first type is a college savings plan. Your money grows without paying taxes on it. When you take money out for school costs, you don’t pay taxes on that either. The second is a prepaid tuition plan. You pay for college now at today’s prices, even though your child won’t go to college for years. This protects you from rising college costs.
A State-by-State Breakdown of 529 Plan Tax Benefits
Every state plus Washington D.C. has 529 plans. Anyone can open one, but parents and grandparents usually do. Each state has different tax benefits, so you need to know your state’s rules.
Here’s what you need to know about your state’s 529 plan benefits:
Alabama 529 Tax Deduction
Alabama lets you deduct 529 contributions from your state taxes. Single people can deduct up to $10,000 per year. Married couples can deduct up to $20,000 per year. You get this tax break whether you use Alabama’s CollegeCounts 529 plan or any other state’s plan.
Alaska 529 Tax Deduction
Alaska does not offer a state tax deduction for 529 plan contributions, since the state has no income tax. However, residents can still open and contribute to 529 plans to receive federal tax benefits, such as tax-free growth and withdrawals for qualified education expenses.
Arizona 529 Tax Deduction
Arizona gives you a tax deduction for 529 contributions. Single people can deduct up to $2,000 per year. Married couples can deduct up to $4,000 per year. You can use any state’s 529 plan and still get this tax break. The money can be used at any school, not just Arizona schools. Grandparents and other family members who put money in the account can also get these same tax deductions.
For example, a Raytheon engineer living in Tucson who puts $4,000 into her son’s 529 plan each year gets the full tax deduction on her Arizona taxes. With University of Arizona’s in-state tuition running about $10,400 per year, that tax break adds up. If you need help understanding how 529 plans work with your taxes, a Tucson tax attorney can explain the rules and help you get every deduction you’re allowed.
Arkansas 529 Tax Deduction
Arkansas taxpayers can deduct up to $5,000 as an individual or $10,000 if they are filing jointly every tax year for contributions to their 529 plan. The deduction applies specifically to contributions made to Arkansas’s 529 plan (the GIFT Plan or iShares 529 Plan), and contributions above these limits can be carried forward to future tax years. Arkansas residents must keep their money in the account for at least one year to maintain the tax deduction benefit.
California 529 Tax Deduction
California does not give a state tax deduction for money put into a 529 plan. This means residents do not get a state tax break for using these college savings accounts. Still, California residents can use federal tax benefits, such as tax-free growth and tax-free withdrawals for qualified education costs, when using 529 plans, including the state’s ScholarShare 529 plan.
Colorado 529 Tax Deduction
In Colorado, you can subtract every dollar you put into a 529 plan from your state income taxes. This works for 529 plans from any state, not just Colorado’s CollegeInvest plans. There is no yearly limit on how much you can deduct, which makes Colorado one of the most generous states for 529 tax benefits.
Connecticut 529 Tax Deduction
In Connecticut, you can deduct up to $5,000 yearly if you file taxes alone, or up to $10,000 if you file jointly, for money you put into a 529 plan. This deduction only applies to Connecticut’s CHET 529 plan. If you contribute more than these limits in one year, you cannot carry the extra amount forward to future years. If you withdraw money for non-qualified expenses, you may owe taxes and a 10% penalty on the earnings.
District of Columbia (Washington, D.C.) 529 Tax Deduction
Taxpayers can deduct up to $4,000 as an individual or $8,000 for married couples filing jointly every tax year for contributions to their 529 plan. In addition, any excess contributions can be carried over and deducted in future years.
Delaware 529 Tax Deduction
Delaware does not give a state tax deduction for 529 plan contributions. Residents can still get federal benefits, like tax-free growth and tax-free withdrawals for qualified education costs, and they can invest in any state’s 529 plan.
Florida 529 Tax Deduction
Florida has no personal income tax, so there are no state tax deductions for 529 plan contributions. Residents can still use any state’s 529 plan for federal tax benefits, like tax-free growth and withdrawals for qualified education costs. Florida also offers the Florida Prepaid College Plan, which lets families lock in current tuition rates for the future.
Georgia 529 Tax Deduction
In Georgia, taxpayers can deduct up to $4,000 as an individual or $8,000 if they are married filing jointly every tax year for contributions to their 529 plan. This deduction applies only to contributions made to Georgia’s Path2College 529 Plan, and while contributions above these limits cannot be carried forward to future tax years, each beneficiary can have their own account with separate deduction limits for contributions from different taxpayers.
Our Atlanta tax attorneys can help you properly document and claim these 529 plan deductions on your Georgia state tax returns, while also reviewing potential tax strategies to maximize both state and federal benefits from your educational savings.
Hawaii 529 Tax Deduction
Hawaii does not offer a state income tax deduction for 529 plan contributions. Residents can still use 529 plans for federal tax benefits, including tax-free growth and withdrawals for qualified education expenses.
Idaho 529 Tax Deduction
Taxpayers in Idaho can deduct up to $6,000 as an individual or $12,000 as a married couple filing jointly every tax year for contributions to their 529 plan.
Illinois 529 Tax Deduction
Illinois taxpayers can deduct up to $10,000 as an individual or $20,000 if filing jointly every tax year for contributions to their 529 plan.
Indiana 529 Tax Deduction
Indiana taxpayers are eligible for a state income tax credit of 20% of all their contributions to their 529 plans, up to $1,000 per year.
Iowa 529 Tax Deduction
Iowa taxpayers can deduct up to $3,474 of their contributions per beneficiary in order to determine their adjusted gross income (AGI).
Kansas 529 Tax Deduction
Taxpayers in Kansas can deduct up to $3,000 as an individual or $6,000 for a married couple filing jointly every tax year for contributions to their 529 plan.
Kentucky 529 Plan Deduction
In Kentucky, you can deduct up to $10,000 each year on your state taxes for contributions to a 529 plan, whether it’s Kentucky’s KY Saves 529 plan or another state’s plan. Contributions above this limit cannot be carried forward to future years. We can help you claim these deductions on your Kentucky tax return and set up your education savings to get the max benefits available.
Louisiana 529 Plan Regulations
Louisiana residents can deduct up to $2,400 as an individual or $4,800 if filing jointly every tax year for contributions to their 529 plan. If taxpayers do not use their full deduction, they can roll over any unused deduction to future tax years.
Maine 529 Tax Deduction
In Maine, you can contribute up to $100,000 per beneficiary each year to a 529 plan. There is no state tax deduction for contributions, but the NextGen 529 plan offers special grants. Eligible residents can get a $200 initial match, plus up to $100 each year in matching grants for continued contributions. Babies born in Maine also receive a $500 grant automatically in a NextGen 529 account.
Maryland 529 Tax Deduction
Taxpayers can deduct up to $2,500 as an individual or $5,000 if married and filing jointly every tax year for contributions to their 529 plan. Contributions that total more than $2,500 per beneficiary may be deducted for up to 10 years.
Massachusetts 529 Tax Deduction
Taxpayers in MA can deduct up to $1,000 as an individual or $2,000 if married and filing jointly every tax year for contributions to their 529 plan.
Michigan 529 Tax Deduction
Taxpayers in Michigan can deduct up to $5,000 as an individual or $10,000 if married and filing jointly every tax year for contributions to their 529 plan. This deduction applies only to contributions made to Michigan’s Education Savings Program (MESP) or Michigan Education Trust (MET) plans, and contributions above these limits cannot be carried forward to future tax years.
Our Detroit tax attorneys can help you properly claim these 529 plan deductions on your Michigan state tax returns and identify additional tax strategies for maximizing the benefits of your educational savings.
Minnesota 529 Tax Deduction
Taxpayers in MN can deduct up to $1,500 as an individual or $3,000 if married and filing jointly every tax year for contributions to their 529 plan.
Mississippi 529 Tax Deduction
Taxpayers are able to deduct up to $10,000 as an individual or $20,000 if married and filing jointly every tax year for contributions to their 529 plan.
Missouri 529 Tax Deduction
Taxpayers can deduct up to $8,000 as an individual or $16,000 if married and filing jointly every tax year for contributions to their 529 plan.
Montana 529 Tax Deduction
Taxpayers can deduct up to $3,000 as an individual or $6,000 if married and filing jointly every tax year for contributions to their 529 plan.
Nebraska 529 Tax Deduction
Taxpayers can deduct up to $10,000 as individuals or $5,000 if married taxpayers are filing separate returns every tax year for contributions to their 529 plan.
Nevada 529 Tax Deduction
Nevada has no state income tax, so there are no state tax deductions for 529 plan contributions. Residents can still get federal tax benefits with any state’s 529 plan, including Nevada’s Vanguard 529. Eligible families may also qualify for the Silver State Matching Grant Program, which matches up to $300 a year in contributions.
New Hampshire 529 Tax Deduction
New Hampshire has no state income tax, so there are no state tax deductions for 529 plan contributions. Residents can still use any state’s 529 plan and receive federal benefits like tax-free growth and withdrawals for qualified education costs.
New Jersey 529 Tax Deduction
New Jersey does not offer state tax deductions for 529 plan contributions. However, New Jersey residents can still contribute to any state’s 529 plan, including New Jersey’s NJBEST plan to receive federal tax benefits such as tax-free growth and withdrawals for qualified education expenses. NJBEST also provides a scholarship of up to $3,000 for beneficiaries who attend NJ colleges.
New Mexico 529 Tax Deduction
In New Mexico, you can deduct the full amount of your 529 plan contributions from state taxes, with no yearly limit. This applies to any state’s 529 plan, not just New Mexico’s Education Plan, making it one of the best state tax benefits for college savings.
New York 529 Tax Deduction
In New York, taxpayers can deduct up to $5,000 as an individual or $10,000 if married and filing jointly every tax year for contributions to their 529 plan. This deduction applies only to contributions made to New York’s 529 plans (the Direct Plan or Advisor-Guided Plan), and contributions above these limits cannot be carried forward to future tax years.
New York residents should note that withdrawals for non-qualified expenses may require them to pay back any previous tax benefits received.
North Carolina 529 State Deductions
North Carolina does not offer a state tax deduction for 529 plan contributions. Residents can still use any state’s 529 plan, including North Carolina’s National College Savings Program, to get federal benefits like tax-free growth and withdrawals for qualified education costs.
North Dakota 529 Tax Deduction
In North Dakota, you can deduct up to $5,000 a year on your state taxes, or $10,000 if married and filing jointly, for contributions to the College SAVE 529 plan. The deduction only applies to North Dakota’s plan, and extra contributions can’t be carried over to future years. The state also offers up to $300 a year in matching grants for eligible residents who add money to College SAVE accounts.
Ohio 529 Deduction
Taxpayers can deduct up to $4,000 as an individual or $4,000 if filing jointly per beneficiary, with unlimited carryforward of excess contributions, every tax year for contributions to their 529 plan.
A Goodyear engineer paying taxes in Akron who contributes $6,000 this year to her daughter’s Ohio 529 account can deduct $4,000 on her state taxes now and carry forward the remaining $2,000 deduction to next year. With University of Akron’s in-state tuition running $10,399 per year plus room and board bringing total costs to $28,665 annually, that tax deduction provides real savings for families saving for college expenses.
Oklahoma 529 Tax Deduction
Taxpayers can deduct up to $10,000 as an individual or $20,000 if married and filing jointly every tax year for contributions to their 529 plan.
In addition, any contribution above this amount can be deducted over the following five tax years.
Oregon 529 Tax Deduction
All Oregon taxpayers can receive a state income tax credit up to $150 for single filers and $300 for joint filers with an adjusted gross income less than $30,000.
Pennsylvania 529 Tax Deduction
In Pennsylvania, taxpayers can deduct up to $15,000 per beneficiary as an individual or $30,000 if married and filing jointly every tax year for contributions to their 529 plan. This tax benefit stands out because Pennsylvania allows the deduction for contributions to any state’s 529 plan, not just Pennsylvania’s PA 529 plans, and each beneficiary can have multiple accounts with separate deduction limits.
What makes it even better is that grandparents and other relatives can claim deductions for their contributions to these accounts.
Rhode Island 529 Tax Deduction
Taxpayers are eligible for a tax deduction of up to $500 as an individual or $1,000 for married couples filing jointly every tax year for contributions to their 529 plan. However, certain contributions made beyond annual limits can be deducted in future years.
South Carolina 529 Tax Deduction
In South Carolina, taxpayers can deduct their entire 529 plan contribution from their state taxable income, with no annual limit. This complete deduction applies only to contributions made to South Carolina’s Future Scholar 529 plan, not to other states’ plans, and residents can claim the deduction for each account they contribute to during the tax year. The state also lets taxpayers deduct any contributions until the tax filing deadline of the following year.
South Dakota 529 Deduction Rules
Since South Dakota has no state income tax, there are no state tax deductions available for 529 plan contributions. However, South Dakota residents can still open and contribute to any state’s 529 plan, including South Dakota’s CollegeAccess 529 plan, to receive federal tax benefits such as tax-free investment growth and withdrawals for qualified education expenses.
Tennessee 529 Plan Benefits
Because Tennessee does not have a state income tax (it previously taxed only investment income and dividends until 2021), there are no state tax deductions available for 529 plan contributions. However, Tennessee residents can still open and contribute to any state’s 529 plan, including Tennessee’s TNStars College Savings 529 program, to receive federal tax benefits such as tax-free investment growth and withdrawals for qualified education expenses.
How Texas Handles 529 Deductions
Since Texas has no state income tax, there are no state tax deductions available for 529 plan contributions. However, Texas residents can still open and contribute to any state’s 529 plan, including Texas’s two plans (the Texas College Savings Plan and the LoneStar 529 Plan), to receive federal tax benefits such as tax-free investment growth and withdrawals for qualified education expenses.
Utah 529 Contribution Deductions
In Utah, contributions to the 529 plan of up to $2,040 as an individual or $4,080 by a married couple filing jointly are eligible for a 5% credit against the Utah income tax.
Vermont 529 Deduction Explained
Vermont taxpayers who contribute to the 529 plan are eligible for a state income tax credit of 10% of the first $2,500 put into the fund ($250 per beneficiary). Married couples who are filing jointly can also receive the same tax credit for the first $5,000 in contributions ($500 per beneficiary).
Virginia 529 Plan Overview
Virginia taxpayers who have a 529 account may deduct contributions up to $4,000 per account per year with an unlimited carry forward to future tax years, subject to some restrictions.
Washington State Rules for 529 Contributions
Since Washington state has no income tax, there are no state tax deductions available for 529 plan contributions. However, Washington residents can still open and contribute to any state’s 529 plan, including Washington’s DreamAhead College Investment Plan and Guaranteed Education Tuition (GET) Program, to receive federal tax benefits such as tax-free investment growth and withdrawals for qualified education expenses.
West Virginia 529 Tax Deduction
The contributions to a 529 plan are fully deductible when computing the state’s taxable income.
Wisconsin 529 Tax Deduction
Taxpayers can deduct up to $3,340 if filing as an individual or $3,340 if married and filing jointly every tax year for contributions to their 529 plan.
Wyoming 529 Tax Deduction
Wyoming does not have a state income tax, so there are no state tax deductions for 529 plan contributions, but residents can still receive federal benefits like tax-free growth and withdrawals for qualified education expenses.
When You Need Professional Help
Tax preparers without specialized knowledge often miss 529 deduction opportunities or report withdrawals incorrectly on your tax return. They might not know which expenses qualify or how to properly report rollovers between accounts.
If you change the beneficiary to someone who is not a family member, you could face taxes and penalties. A tax attorney can help you understand the family member rules and plan beneficiary changes that keep your tax benefits.
Some parents use 529 money for K-12 tuition, which is allowed up to $10,000 per year per student. However, not all states follow this federal rule, so you might lose state tax benefits or face state taxes on these withdrawals.
Getting Your 529 Plan Right
A tax attorney can review your current 529 plan setup to make sure you get all available tax benefits. They can help you choose the right state plan for maximum deductions and set up contribution schedules that work with gift tax rules.
If you made mistakes in previous years, a tax professional can help you fix them through amended returns or other corrective actions. They can also help you plan withdrawals to minimize taxes and coordinate your 529 plan with other education tax credits.
Professional guidance helps you avoid costly mistakes while maximizing the tax benefits these plans offer. This becomes especially important when you have multiple children, high income that affects tax credits, or complex family situations involving grandparents or other contributors.
Contact us today, and let’s make your 529 plan work harder for you.
