529 College Savings Plan Calculator
Project a 529 plan against a taxable account, with your state deduction and college-cost inflation. Uses the IRS 2026 rules for K-12, loans and Roth rollovers.
529 Plan Calculator
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Project 529 plan growth (tax-free for qualified education expenses) vs equivalent taxable account. Includes state income-tax deduction value and projected college cost inflation. Returns coverage % of total future college cost.
529 Plan (tax-free)
Taxable account (comparison)
How to Use the 529 Calculator
Realistic college cost
Enter the yearly cost you expect for one year of college today: tuition, fees and, if relevant, room and board. Use the published cost of the colleges your child is likely to consider rather than a national average, and set the number of years.
Use realistic college inflation
College costs have usually risen faster than general prices. The rate you enter is an assumption; the result is very sensitive to it, so try a range.
State deduction varies massively
Federal tax does not give a deduction for 529 contributions, but many states do, for their own plan and up to their own limit. Enter your state's yearly limit and your state income tax rate; if your state gives none, enter zero. Your state tax department or plan website states the current rules.
Don't try to fund 100%
The result shows how much of the projected cost the 529 would cover. Few families aim for 100%; the rest usually comes from current income, financial aid and student work. Money not needed for college has other uses, explained below.
529 Plans — The Most Powerful US Education-Savings Vehicle
How a 529 plan is taxed
A 529 plan, or qualified tuition program, is named after Section 529 of the Internal Revenue Code. Earnings grow without yearly tax, and withdrawals are tax-free when they pay qualified education expenses. Contributions are not deductible on the federal return, though many states give their own deduction or credit. If you withdraw money for anything else, the earnings part is taxable and generally carries an additional 10% tax; the part that was your contribution is not taxed again. IRS Publication 970 sets out the rules.
What counts as a qualified expense
Tuition, fees, books, supplies and required equipment at an eligible college, university or vocational school, plus room and board for students enrolled at least half-time. Computer equipment and internet access used by the student also qualify. Fees, books and equipment for a registered apprenticeship count, and up to $10,000 in a lifetime can repay the beneficiary's qualified student loans, with a separate $10,000 for each of their siblings.
For elementary and secondary school the rules changed in 2025. Public Law 119-21 raised the yearly limit from $10,000 to $20,000 for tax years after 2025, and widened what counts beyond tuition: curriculum and books, online materials, outside tutoring by a qualified tutor, standardised and admission test fees, dual-enrolment fees and educational therapies for students with disabilities.
"The rollover must be from a section 529 account that has been open for more than 15 years."
IRS Publication 590-AThe comparison with a taxable account
For a $400 monthly contribution over 12 years at 7%, this calculator projects about $85,900 in the 529 against about $79,800 in a taxable account after tax, a difference of about $6,000 before any state deduction, using its default 15% gains-tax rate. It rests on an assumption you should know: the calculator treats 40% of each year's return in the taxable account as taxed that year, and taxes the remaining gain once at the end. Real tax drag depends on the funds you hold and how often they pay out, so read the 529 advantage as an order of magnitude, not a promise.
When the money is not needed for college
You can change the beneficiary to another member of the family, such as a sibling, without tax. Since 2024 a 529 account open for more than 15 years can also be rolled into a Roth IRA for the beneficiary, up to $35,000 over their lifetime, according to IRS Publication 590-A. Each year's rollover counts against the annual Roth IRA limit, and money contributed in the last five years cannot be moved.
Grandparents and others can give to a 529 within the gift tax annual exclusion, which Rev. Proc. 2025-32 sets at $19,000 per recipient for 2026. A special election lets a contribution of up to five years' exclusions be spread over five years for gift tax purposes.
The 2026 rules: K-12, student loans and the Roth rollover
Earnings in a 529 grow untaxed and come out tax-free for qualified education expenses (IRS Publication 970).
Contributions are not deductible on the federal return; many states offer their own deduction.
From 2026 up to $20,000 a year can pay for elementary or secondary school, up from $10,000 (Public Law 119-21).
K-12 expenses now include books, online materials, qualified tutoring and test fees, not only tuition.
Up to $10,000 in a lifetime can repay the beneficiary's qualified student loans.
Registered apprenticeship fees, books and equipment are qualified expenses.
An account open over 15 years can roll up to $35,000 in a lifetime into the beneficiary's Roth IRA.
A non-qualified withdrawal taxes only the earnings, usually with an extra 10% tax.
The gift tax annual exclusion is $19,000 per recipient in 2026 (Rev. Proc. 2025-32).
This calculator assumes 40% of the taxable account's yearly return is taxed each year. That is its own assumption.
Frequently Asked Questions
- The 529 does not tax growth along the way and does not tax withdrawals for qualified education expenses, and your state may add a deduction. A brokerage account is taxed on dividends and gains but can be spent on anything. For a $400 monthly contribution over 12 years at 7%, this calculator projects about $6,000 more in the 529 before any state deduction, on its own tax-drag assumption. The trade-off is that money spent on something other than education pays tax on the earnings plus, usually, an extra 10%.
- If your state gives a deduction or credit for contributing to its own plan, that is often worth having, so start with your home state's plan. Otherwise you can use any state's plan. Compare fees and the investment options; over a long horizon, costs matter. Each plan publishes its fees and its state tax rules.
- You have several options. Change the beneficiary to another member of the family, such as a sibling. Use it for apprenticeship costs, for up to $20,000 a year of K-12 expenses from 2026, or up to $10,000 of student loan repayments. If the account has been open for more than 15 years, roll up to $35,000 over the beneficiary's lifetime into their Roth IRA, within the annual Roth limit. Or withdraw it: the earnings are then taxable, usually with an extra 10% tax.
- There is no single right amount. Enter what you can afford and see the projected coverage; then try a little more. A state deduction may make contributing up to your state's limit worthwhile. The projection depends heavily on the return and the college-cost inflation you assume, so test a range of both.
- A grandparent can open a 529 for a grandchild, and contributions count as gifts: up to $19,000 a year per grandchild in 2026 falls within the annual exclusion. How a grandparent-owned account affects financial aid depends on the current federal aid rules and on each college; check the Department of Education's guidance and the colleges' own aid offices before relying on it.
- It can. The treatment depends on who owns the account and on the federal aid formula and each college's own rules, which change. The Department of Education's Federal Student Aid site and the colleges' aid offices give the current position.
- No. 529 contributions are not deductible on the federal return. The federal benefit is that earnings grow without tax and withdrawals for qualified expenses are tax-free. Many states give a deduction or credit for contributions to their own plan, up to a limit they set.
- Gifts to a 529 count against the gift tax annual exclusion, $19,000 per recipient in 2026. A special election lets you treat a larger contribution, up to five years of exclusions, as made evenly over five years for gift tax purposes. With the 2026 exclusion of $19,000 that is up to $95,000 for one beneficiary. You make the election on Form 709, the gift tax return, and report one-fifth of the amount in each of the five years.
- Yes. From 2026 up to $20,000 a year per beneficiary can be withdrawn tax-free for elementary or secondary school, up from $10,000, under Public Law 119-21. The law also widened K-12 expenses beyond tuition to include curriculum and books, online materials, qualified tutoring, test fees and dual-enrolment fees. State tax treatment can differ, so check your state's rules before withdrawing.
- A 529 can pay for an eligible educational institution, and some institutions outside the US qualify. IRS Publication 970 defines an eligible school as one eligible to take part in the US Department of Education's student aid programs. Ask the university whether it is, before relying on it. Tax residency when the money is withdrawn also matters, so take advice for cross-border cases.
Method & sources
How it computes
Future value of the starting balance and yearly contributions at the entered return, against a taxable account in which 40% of each year's return is taxed at the entered rate (this tool's own assumption, stated on the page) with the remaining gain taxed at the end; state deduction = the lesser of contributions and the state limit, times the state rate; college cost compounded at the entered inflation.
What this tool implements
- Pub 970: qualified expenses, $10,000 lifetime student-loan limit per beneficiary and per sibling, additional 10% tax on non-qualified earnings. Public Law 119-21 §70413 raises the K-12 limit to $20,000 for tax years after 2025 and widens K-12 expenses. Pub 590-A: $35,000 lifetime 529-to-Roth rollover, 15-year account. Rev. Proc. 2025-32: $19,000 gift exclusion; Form 709 instructions: the five-year election.
- The verdict always said '4 years' whatever college length was entered, and called 51-99% coverage 'half to three-quarters'. The tax-drag comment said 25% while the code used 40%. All three fixed; the 40% is now disclosed as an assumption.
- Removed as unsourced: state-by-state deduction figures, Morningstar plan picks, 2024 college cost averages, a FAFSA 5.64% rate and the 2024 grandparent rule, named foreign universities, and a pull-quote claiming $95K vs $88K (the tool gives $85,900 vs $79,800).
Sources
- Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education, chapter 7: Qualified Tuition Program. https://www.irs.gov/pub/irs-pdf/p970.pdf
- Public Law 119-21 (One Big Beautiful Bill Act), 4 July 2025, §§70104 and 70413. https://www.govinfo.gov/content/pkg/PLAW-119publ21/pdf/PLAW-119pu…
- Internal Revenue Service. Publication 590-A (2025), Contributions to Individual Retirement Arrangements (529-to-Roth rollovers). https://www.irs.gov/pub/irs-pdf/p590a.pdf
- Internal Revenue Service. Rev. Proc. 2025-32: inflation-adjusted items for 2026 (§3.05 child tax credit; §3.06 earned income credit; §3.23 qualifying relative; §3.42 gift exclusion). https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- Internal Revenue Service. Instructions for Form 709 (2025), Line B: Qualified Tuition Programs. https://www.irs.gov/pub/irs-pdf/i709.pdf
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