A 529 plan is a state-sponsored account that offers tax-advantaged savings to cover college, trade and vocational courses and qualified K-12 expenses. It can be a powerful tool for saving for your child’s college expenses, especially in light of the high cost of education today.
Consider that in 2025, the average published tuition and fees for full-time undergraduate students, as reported by College Board are:
- Public four-year in-state: $11,610 ($300 higher than in 2024)
- Public four-year out-of-state: $30,780 ($940 higher than in 2024)
- Public two-year in-district: $4,050 ($100 higher than in 2024)
- Private nonprofit four-year: $43,350 ($1,610 higher than in 2024)
In addition to helping with educational costs, a 529 plan can also be a valuable estate planning and retirement savings tool. As of January 1, 2024, 529 account holders can transfer up to a lifetime limit of $35,000 to a Roth IRA for a beneficiary (subject to certain limitations). That's welcome news to families worried about having leftover or unused funds in a 529 plan account. The new Roth IRA rule, included in the SECURE 2.0 Act, will help beneficiaries avoid both taxes and the usual 10% penalty for nonqualified withdrawals, and help people who want to fund a Roth in the years when their income may be too high to contribute.
What are 529 plans?
Broadly speaking, a 529 plan is a qualified tuition plan that allows federal tax-free withdrawal of earnings, as well as the possibility for tax deductions. Each state offers a 529 plan, providing families an opportunity to save for their child’s education. While this once only applied to colleges, the Tax Act of 2017 now allows contributions to be used toward primary and secondary school qualified expenses.
A main benefit of 529 plans are the high contribution limits, which are usually high enough that you may never have to worry about hitting the ceiling. However, if the limit is reached, any contributions made to the account will not be accepted and will be returned to the investor.
What are 529 plan contribution limits
Anyone can contribute to a 529 plan and name anyone as a beneficiary. Parents, grandparents, uncles and aunts, spouses, stepparents and friends can all contribute on behalf of your recipient.
Unlike certain retirement plans, there are no yearly contribution limits to a 529 plan. However, all states and the District of Columbia have maximum aggregate contribution limits for each 529 account. In 2025, you can gift up to $19,000 in a single 529 plan without the funds counting against the lifetime gift tax exemption amount, according to SavingForCollege. That means you can fund a 529 plan with up to five years’ worth of contributions all at once. — individuals can contribute up to $95,000 in a single year to a particular 529 plan in 2025.
Georgia and Mississippi have the lowest limits at $235,000 per beneficiary. The highest limit is in Arizona at $575,000 in 2025.
Five states with the highest aggregate contribution limits in 2025
Five states with the lowest aggregate contribution limits in 2025
How much can be contributed to a 529 plan each year?
Provided you don't exceed the maximum aggregate contribution limit set by the state where the 529 plan is registered, you can contribute as much as you like each year. That said, the IRS treats 529 contributions as gifts, which means they may be subject to taxation if contributions are more than $19,000 per year or $38,000 for married couples filing jointly in 2025.
Maximum 529 plan contribution limits
The maximum contribution limit pertains to each beneficiary. These limits depend on the state, and range from $235,000 to $575,000.
These are the 529 plan contribution limits by state, per year in 2025
529 contributions and the gift tax for 2025
The IRS counts contributions to 529 plans as gifts. So, if you, as an individual, set aside more than the gift tax exclusion — $19,000 for individuals or $38,000 for a married couple giving jointly in 2025 — for any one recipient in a tax year, your 529 contributions may trigger gift tax consequences. If you exceed the annual exclusion, you may need to file a gift tax return.
For example, if you have two children and two 529 plans, and you contribute to the plan jointly as a couple, you can give each child $38,000 per year in 2025, without the need to report those contributions to the IRS. Any contributions above $19,000 for an individual or $38,000 if married, per recipient, per year must be reported to the IRS. At this time, they will be counted toward your lifetime gift tax exemption for an individual of $13.99 million or $27.98 million for married couples in 2025.
Example of 529 contributions and the gift tax for 2025
In 2025, the lifetime gift tax exemption is higher, as is the amount you can contribute in a year without reporting these contributions to the IRS.
Let’s say you have two kids and two 529 plans, and you are a single parent. In 2025, you can contribute $19,000 each or $38,000 total in a year without reporting these contributions to the IRS. However, any contributions above $19,000 (or $38,000 if you're married and filing jointly), must be reported to the IRS and will count toward your lifetime gift tax exemption of $13.99 million for individuals or $27.98 million for couples in 2025. Give more than that limit, and you could incur a flat gift tax of 40% for the excess amount.
529 superfunding
If you want to contribute more to a 529 account without the contributions counting against your lifetime gift tax exemption, the account can be superfunded, which means you fund the 529 plan all at once with up to five year’s worth of contributions.
That means you can contribute up to $95,000 in a single year to a particular 529 plan in 2025 as an individual. Keep in mind that you can’t contribute more money to the same beneficiary within that five-year period without it counting against your lifetime gift tax exemption.
