529 Contribution Limits 2024: Maximums by State, Gift Tax Exclusion, and More

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Kathryn Flynn

By Kathryn Flynn

September 16, 2024

There are no yearly 529 plan contribution limits, as there are with many retirement accounts. However, each state sets its lifetime contribution limit for 529 accounts per beneficiary, typically ranging from $235,000 to more than $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. State tax deductions for 529 accounts can also influence decisions on yearly contributions, as most states offering a deduction set an annual limit on the amount you can deduct.

If you’re ready to open a 529 and 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.

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 account 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.

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. Any balance above a state’s aggregate limit should align with the beneficiary’s anticipated higher education needs.

529 aggregate limits by state

State
Aggregate Limit
Alabama
$475,000
Alaska
$550,000
Arizona
$575,000 (advisor-sold plan only)
Arkansas
$500,000
California
$529,000
Colorado
$500,000
Connecticut
$550,000
Delaware
$350,000
Florida
$418,000
Georgia
$235,000
Hawaii
$305,000
Idaho
$500,000
Illinois
$500,000
Indiana
$450,000
Iowa
$420,000
Kansas
$475,000
Kentucky
$450,000
Louisiana
$500,000
Maine
$520,000
Maryland
$500,000
Massachusetts
$500,000
Michigan
$500,000
Minnesota
$425,000
Mississippi
$235,000
Missouri
$550,000
Montana
$396,000
Nebraska
$500,000
Nevada
$500,000
New Hampshire
$569,123
New Jersey
$305,000
New Mexico
$500,000
New York
$520,000
North Carolina
$540,000
North Dakota
$269,000
Ohio
$541,000
Oklahoma
$450,000
Oregon
$400,000
Pennsylvania
$511,758
Rhode Island
$520,000
South Carolina
$540,000
South Dakota
$350,000
Tennessee
$350,000
Texas
$500,000
Utah
$560,000
Vermont
$550,000
Virginia
$550,000
Washington
$500,000
Washington, D.C.
$500,000
West Virginia
$550,000
Wisconsin
$545,500
Wyoming
n/a – plan not available

States with the highest aggregate limits

State
Aggregate Limit
Arizona (advisor-sold plan only)
$575,000
New Hampshire
$569,123
Utah
$560,000
Alaska, Connecticut, Missouri, North Carolina, Vermont, Virginia, West Virginia
$550,000
Wisconsin
$545,500

States with the lowest aggregate limits

State
Aggregate Limit
Georgia, Mississippi
$235,000
North Dakota
$269,000
Hawaii, New Jersey
$305,000
Delaware, South Dakota, Tennessee
$350,000
Montana
$396,000

Annual 529 plan gift tax limits

While 529 plans do not have annual contribution limits, gift tax may apply for contributions over a certain amount.

The IRS considers contributions to a 529 plan as completed gifts for federal tax purposes. As of 2024, up to $18,000 per donor per beneficiary ($17,000 in 2023) qualifies for the annual gift tax exclusion. Taxpayers must report excess contributions above $18,000 on IRS Form 709, which will count against the taxpayer’s lifetime estate and gift tax exemption amount ($13.61 million in 2024).

The 5-Year Gift Tax Election

The option is 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, which allows a donor to make a larger tax-free contribution to a 529 plan spread evenly over five years. 

For example, you can treat a lump sum contribution of $90,000 as if it were $18,000 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 $90,000 for a total one-time contribution of $180,000.

This strategy is often used for estate planning purposes, helping reduce taxpayers’ 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.

Lifetime Gift Tax Exemption Amount

Does this mean you’ll have to pay gift tax if you contribute more than $18,000 in one year or $90,000 over five years? Not necessarily. As mentioned, any gifts above the annual exclusion amounts must be reported on the federal tax Form 709, which counts against the $13.61 million lifetime gift tax exclusion.

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

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 ($18,000 in 2024, $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 carry forward excess contributions for state income tax purposes. For example, Louisiana, Ohio, Rhode Island, Virginia, and Wisconsin allow the 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. While there are no yearly contribution limits that taxpayers need to be aware of when contributing to a 529 plan, there are maximum lifetime limits that you should understand, and those vary by state.

A good place to start:

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