Maximum 529 Plan Contribution Limits by State

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Kathryn Flynn

By Kathryn Flynn

November 27, 2023

Each state sets a maximum 529 plan contribution limit per beneficiary. This is an aggregate contribution limit, meaning the maximum total can be contributed to a single beneficiary’s in-state 529 plan from all sources over time. 

The aggregate 529 contribution limit varies across states from $235,000 to greater than $550,000, with the threshold set to ensure that potential costs for higher-end educational pursuits, including college and graduate school, can be met. In line with IRS stipulations, these plans are crafted with safeguards to avoid excess contributions that surpass the anticipated educational expenses of the beneficiary.

Annual 529 plan contribution limits

529 plans do not have annual contribution limits. You can contribute any amount in a given year as long as you are within the aggregate limit, but it’s important to understand the tax implications. 

The IRS considers contributions to a 529 plan as completed gifts for federal tax purposes. As of 2023, up to $17,000 per donor per beneficiary qualifies for the annual gift tax exclusion. Taxpayers must report excess contributions above $17,000 on IRS Form 709, which will count against the taxpayer’s lifetime estate and gift tax exemption amount ($12.92 million in 2023).

There is an option to make a larger 529 plan contribution without affecting your lifetime gift tax exclusion. The IRS allows for a unique strategy known as 5-year gift-tax averaging. This allows a donor to make a larger tax-free contribution to a 529 plan, spread evenly over a 5-year period. For example, you can treat a lump sum contribution of $85,000 as if it were $17,000 per year for five years, provided you make no other gifts to the same beneficiary during this period. A married couple filing jointly can each contribute up to $85,000 for a total one-time contribution of $170,000. This strategy is often used for estate planning purposes, helping reduce a taxpayer’s taxable estate while supporting their family member’s education. Because of its benefits, grandparents sometimes use this 5-year gift-tax averaging as an estate planning strategy.

Aggregate 529 College Savings Plan Limits

Each state sets an aggregate limit for 529 plan contributions. This limit applies to the total contributions to 529 plans administered by a particular state for the same beneficiary over the life of the accounts. The limits are based on the price to attend an expensive 4-year college and graduate school in that state. The limits are intended to allow coverage of all college costs that are considered qualified higher education expenses.

Once the combined balances of a beneficiary’s in-state 529 plans hit the state’s aggregate limit, no additional contributions can be made to any 529 plan administered by that state. However, the accounts won’t face penalization if investment earnings push the balance above the limit. The limit is strictly on additional contributions unless the combined 529 plan balances dip below the limit due to either a drop in the value of the investments or a distribution taken by the account owner.

However, families can contribute beyond a state’s aggregate limit by participating in another state’s plan. IRS regulations don’t prohibit a beneficiary from holding accounts in multiple states with a combined balance exceeding a single state’s aggregate limit. However, any balance above a state’s aggregate limit should align with the beneficiary’s anticipated higher education needs.

States with the highest aggregate limits

Arizona (advisor-sold plan only)
New Hampshire
Alaska, Connecticut, Missouri, North Carolina, Vermont, Virginia, West Virginia

Source: research

States with the lowest aggregate limits

Georgia, Mississippi
North Dakota
Hawaii, New Jersey
Delaware, South Dakota, Tennessee

Source: research

View the full list of maximum contribution limits by state here

Limits on contributions eligible for state income tax benefits

Over 30 states offer a state income tax deduction or state income tax credit for 529 plan contributions. In Colorado, New Mexico, South Carolina, and West Virginia, 529 plan contributions are fully deductible from state taxable income. However, most states limit the contribution amount that can be deducted from taxes in a given year. 

For example, in Pennsylvania, residents may deduct 529 plan contributions up to the amount of the annual gift tax exclusion ($17,000 in 2023) from Pennsylvania taxable income each year. 

In Massachusetts, residents may only deduct up to $1,000 ($2,000 for married persons filing jointly) per year of 529 plan contributions from Massachusetts taxable income.

Other states that allow deductions for 529 contributions fall somewhere in between. You can view a list of each state’s income tax benefit limits here.

Some states allow taxpayers to carryforward excess contributions for state income tax purposes. For example, Louisiana, Ohio, Rhode Island, Virginia, and Wisconsin allow carryforward of excess contributions for an unlimited number of years.

Suppose Ohio parents want to contribute more than their state’s annual limit of $4,000 per beneficiary. In that case, they may deduct the excess in future years in increments of $4,000 per year until the entire contribution amount is deducted. 

Bottom Line

For educational savings options, 529 plans stand out as a favored option, offering tax advantages designed to promote the accumulation of funds for future educational expenses. These state-administered savings accounts are not limitless. However, they each carry a maximum aggregate contribution limit, which varies by state and is subject to change. 

A good place to start:

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