Are 529 Contributions Tax-Deductible?
Updated on July 16, 2025
Quick facts
529 contributions aren’t tax-deductible at the federal level, but many states offer tax deductions or credits for contributions.
If you’ve already built an emergency fund and are consistently contributing to your retirement, a 529 plan can be a tax-efficient way to stay ahead and help cover your children’s education is a clear priority.
Every state has its own approach to 529 plans, and some of the tax rules can feel a bit unclear. A qualified tax advisor can help you sort through the details and make sure you’re getting the benefits without the guesswork.
Looking for ways to pay for your child’s education? A Complete Guide to the Parent Plus Loan
Which States Offer Tax Deductions for 529s
More than 30 states offer tax deductions or credits if you contribute to the 529 for that state.
Alabama
Mississippi
Arizona
Missouri
Arkansas
Montana
Colorado
Nebraska
Connecticut
New Jersey
Delaware
New Mexico
Georgia
New York
Idaho
North Dakota
Illinois
Ohio
Iowa
Oklahoma
Kansas
Pennsylvania
Louisiana
Rhode Island
Maine
South Carolina
Maryland
Virginia
Massachusetts
Washington DC
Michigan
West Virginia
Minnesota
Wisconsin
More than 30 states offer tax deductions or credits if you contribute to the 529 for that state.
1. Alabama
Maine
Ohio
2. Arizona
Massachusetts
Oklahoma
3. Arkansas
Michigan
Pennsylvania
4. Colorado
Minnesota
Rhode Island
5. Connecticut
Mississippi
South Carolina
6. Delaware
Missouri
Viriginia
7. Georgia
Montana
Washington DC
8. Idaho
Nebraska
West Virginia
9. Illinois
New Jersey
Wisconsin
10. Iowa
New Mexico
11. Kansas
New York
12. Louisiana
North Dakota
Which States Don’t Offer 529 Tax Deductions?
Some states don’t offer tax breaks for 529 contributions because they don’t tax income at all, and having no income tax means there’s nothing to deduct against. These nine states are:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
and Wyoming
A few other states that do tax income, but still don’t provide any credit or deduction for 529 contributions. Those states are:
California
Hawaii
Kentucky
and North Carolina
What You Need to Qualify for Tax Deductions
Getting the deduction isn’t automatic. Even if your state offers one, you need to meet a few basic conditions.
You Have to Contribute During the Tax Year. Most states follow the calendar year. If you’re looking to claim the deduction for this year, you’ll need to make your contribution by December 31.
You Usually Need to Use Your State’s 529 Plan. In many states, you only get the tax break if you stick with your state’s official plan. A few states are more flexible and allow any plan. (The infographic above shows what applies in your state.)
There Might Be Income Limits or Deduction Caps. Some states limit who qualifies based on income. Others cap how much you can deduct. For example, New Jersey lets you deduct up to $10,000 if your income is below $200,000.
You’ll Need Proof of Contribution. Hold on to your account statements. States like Massachusetts require documentation when you file, especially if your contributions came from multiple sources.
What happens if you use 529 funds for non-qualified expenses?
If you use 529 funds for anything other than qualified education expenses (including tuition, room and board, and textbooks), the tax advantages no longer apply. The earnings portion of the withdrawal becomes taxable as ordinary income, though your original contributions aren’t taxed again. In addition, a 10% federal penalty typically applies to the earnings portion of a non-qualified withdrawal.
Examples of non-qualified expenses include:
College application and testing fees
Transportation expense
Costs related to extracurricular activities
Health insurance costs
Any other expense that is not considered a qualified education expense