529 Plan Tax Benefit Calculator
529 Plan Tax Benefit Analysis
Calculate state tax deduction and tax-free growth benefit of a 529 plan
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Formula
Total Benefit = State Tax Savings (contribution x state rate x years) + Tax on Growth Avoided (growth x cap gains rate)
Frequently Asked Questions
What are the tax benefits of a 529 plan?
529 plans offer tax-free investment growth and tax-free withdrawals for qualified education expenses (tuition, room, board, books, etc.). Many states also provide a state income tax deduction or credit for contributions. There is no federal income tax deduction.
Can I use 529 funds for non-education expenses?
Non-qualified withdrawals are subject to income tax and a 10% penalty on the earnings portion. Under SECURE 2.0, up to $35,000 of unused 529 funds can be rolled into a Roth IRA for the beneficiary (subject to annual Roth contribution limits and a 15-year account age requirement).
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