How Much You Can Contribute to a 529 Plan in 2024

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Kathryn Flynn

By Kathryn Flynn

November 3, 2023

There are no yearly contribution limits to a 529 plan like certain retirement accounts. However, each state has a different aggregate contribution limit for each 529 account, typically between $235,000 and $550,000. You also might trigger the gift tax if you contribute more than $18,000 to a 529 account or multiple accounts with the same beneficiary in 2024.

If you’re ready to start saving for college, check out the best 529 plans for 2024. Read on to learn more about how the contribution limits and gift tax work.

In this article

Annual 529 Contribution Limits

In 2024, many families are trying to make the most of their tax-advantaged savings accounts. Those saving for retirement may deposit up to $7,000 to an IRA (up from $6,500 in 2023) or Roth IRA ($8,000 if you’re over age 50) and up to $23,000 to an employer-sponsored 401(k). But what about college funds? That’s where it can get tricky since the IRS doesn’t specify annual 529 plan contribution limits, and many 529 plans offer high total contribution limits.

There is no annual limit, but each state sets the aggregate limit for 529 accounts. The totals vary but could be as high as $550,000. This means that most families won’t have to worry about hitting their 529 plan’s contribution limit this year. However, if you exceed the gift tax exclusion in a year, you might trigger a gift tax. Read on to learn more about each contribution limit.

Annual Gift Tax Exclusion

One of the many benefits of saving for a child’s future college education with a 529 plan is that contributions are considered gifts for tax purposes. In 2024, gifts totaling up to $18,000 per individual will qualify for the annual gift tax exclusion, up from $16,000 in 2022 and $17,000 in 2023.

If you and your spouse have three grandchildren (or children), you can jointly give $108,000 without gift-tax consequences since each child can receive $18,000 in gifts from you and $18,000 from your spouse. Remember, the annual gift tax exclusion amount also includes non-529 gifts, so be sure to include any cash or property gifts in your total.

If your total gifts to an individual will be more than $18,000 in 2024 or $17,000 in 2023, the excess amount will count against your lifetime estate and gift tax exemption and must be reported on Form 709 when you file your taxes. In 2024, individuals can gift up to $13.61 million without paying federal estate or gift tax (up from $12.92 million in 2023). There is no joint gift-tax return, so you and your spouse must file separately.

The 5-Year Election

Individuals may contribute as much as $90,000 to a 529 plan in 2024 ($85,000 in 2023) if they treat the contribution as if it were spread over a five-year period. The 5-year election must be reported on Form 709 for each of the five years. For example, a $50,000 529 plan deposit in 2024 can be applied as $10,000 per year, leaving $8,000 in unused annual exclusion per year. This is often called 5-year gift tax averaging or superfunding. 

This is often a great estate-tax planning strategy for parents and grandparents. They’re able to shelter a large number of assets from estate taxes while retaining control of the funds in a 529 account. However, if you do end up changing your mind down the road and revoking the funds in the account, they will be added back to your taxable estate.

Lifetime Gift Tax Exemption Amount

Does this mean if you contribute more than $18,000 in one year or $90,000 over five years, you’ll have to pay gift tax? Not necessarily. As mentioned above, any gifts above the annual exclusion amounts must be reported on the federal tax Form 709, which counts against the $12.92 million lifetime gift tax exclusion.

Any amounts that exceed the exclusion could trigger gift taxes of up to 40%, but individuals within the $13.61 million limit will not be subject to gift taxes.

529 College Savings Plan Aggregate Limits

Unlike IRAs or 401(k)s, there are no annual contribution limits for 529 plans. However, there are maximum aggregate limits, which vary by plan. Under federal law, contributions to a 529 plan cannot exceed the expected cost of the beneficiary’s qualified higher education expenses. Limits vary by state, ranging from $235,000 to $550,000.

This amount represents what the state believes to be the full cost of attending an expensive school and graduate school, including textbooks and room and board. If your plan balance is close to the limit, don’t worry about future earnings in the account pushing it over. The funds can remain in the account without penalty, but the family will not be able to make any future contributions unless a market drop brings the account balance back down.

529 Plan State Income Tax Benefits

Over 30 states, including the District of Columbia, offer a state income tax credit or deduction up to a certain amount. For example, contributions to a New York 529 plan of up to $5,000 per year by an individual or $10,000 per year by a married couple filing jointly are deductible in computing state income tax.

However, that doesn’t mean New York parents are limited to contributing $10,000 to their 529 plan. Suppose the contributor takes advantage of the annual gift tax exclusion and deposits $18,000 in 2024. In that case, the entire amount will grow federal tax-free in this education savings investment account, but only the first $10,000 may be deducted from their state taxable income.

The Bottom Line

There are no yearly contribution limits that taxpayers need to be aware of when contributing to a 529 plan. However, there are maximum lifetime limits that you should understand, and those vary by state. Each plan account can typically receive between $235,000 and $550,000 in lifetime contributions from all sources, including lump sum payments or through a brokerage.

Take note: if you’re an account owner considering making substantial contributions, be aware of the impact of contributing more than the gift tax allows, as all contributions could be treated as a gift. Contributing more than $18,000 in 2024 could trigger that tax if you are above the lifetime exclusion.

Frequently Asked Questions (FAQs)

How much can I contribute to a 529 and still be tax deductible?

Contributions to 529 plans are not tax deductible on a federal level. All the money in your 529 college savings account can grow tax-free and be used on qualified expenses, generally for regular college expenses like tuition, housing, or books.

How much do you have to contribute to a 529 plan? 

There are no minimum contributions to 529 plans. You do not have to contribute regularly or provide any specific dollar figure to contribute or open an account.

Next Steps

A good place to start:

See the best 529 plans, personalized for you

A good place to start:

See the best 529 plans, personalized for you