These States Have the Best 529 Plans

These States Have the Best 529 Plans

Updated January 11, 2023
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These States Have the Best 529 Plans

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Saving for college can feel like an insurmountable task, so it’s important to start a college savings program early – and to pick one that will afford you the best tax benefits. Every state offers its own 529 college savings plan, but you aren’t limited to your home state’s offering when you open an account.

Find out which states have the best 529 plan below.

Understanding the 529 Plan

First, let’s look at what the 529 plan is and how it may help you. A 529 plan is a savings plan meant for your child’s education. Originally, these plans were strictly for college education, but today, you can use the funds to pay for private school tuition for grades K-12.

The money you contribute to a 529 plan grows tax-free. When it’s time to pay for your child’s education, you can withdraw the contributions and earnings without paying taxes on it – as long as they are used for qualified educational expenses. You’ve already paid your taxes on the contributions (income taxes). Some states allow you to deduct your contributions from your state income taxes, which lowers your tax liability, which is another win-win for you.

When you withdraw the funds to pay for qualified education, you won’t pay taxes on the earnings, which means you grew your child’s college education funds tax-free.

The Best College Saving Plan by State


Ohio’s CollegeAdvantage 529 Plan has brought in consistent returns over the last 10 years. The plan offers a variety of options whether you want to base your investments on age or risk tolerance.

Age-based plans start off aggressive and taper off to conservative as your child ages. Risk-tolerance based plans are based on how much risk/reward you can handle. The investments don’t change as your child ages, though.

Ohio’s 529 plan offers low costs, actually below the national average. It also offers a large tax deduction for Ohio residents – to the tune of $4,000. In-state and out-of-state investors can participate, but only Ohio residents get to take advantage of the tax deductions. The Ohio plan includes Vanguard funds as well as a variety of FDIC-insured options, including CDs.


The State of Illinois’ Bright Start 529 College Savings Plan offers an amazing selection of investment options – not just for Illinois residents – as well as generous tax deductions. You can choose from 11 different fund companies with the Illinois 529 as well as investment types. Investors can choose from:

  • Age-based portfolio – Investments start aggressively at a young age and getting more conservative as the child ages
  • Target portfolio – Invest in a mixture of asset classes that remain consistent throughout the investment’s life
  • Individual portfolio – You can create and manage your own portfolio

You can start investing with just $25 and the plan has average management fees. Many consider the 529 plan Illinois offers the best college savings plan available today.

New York

New York offers its residents hefty income tax deductions when investing in its 529 plan. This Advisor-guided 529 college savings plan helps offset the state’s high income taxes, making it even more worthwhile for residents to invest. New York only has one fund company (Vanguard), which has some of the lowest fund fees available.

Of the investment choices offered, your best bet is to stick with the age-based portfolio as it’s managed for you based on your child’s age and subsequent risk tolerance. Your other option is an individual portfolio; however, it requires much more hands-on management from you. The portfolio isn’t adjusted for age unless you change the mixture of asset classes yourself.


The Utah my529 Plan doesn’t have a minimum contribution requirement, which right off the bat makes it attractive. Plus, the Utah plan allows maximum contributions of a whopping $485,000 which is one of the highest limits in the country.

Utah's plan offers four age-based investment options that allow you to manage your risk even a little more. For example, you can choose aggressive or conservative options based on your risk tolerance. Choosing the aggressive option will focus your investments on more growth-based investments rather than stable (less risky) investments.

Utah also offers a unique 5% tax credit on the first $2,000 contributions by an individual or $4,000 for a married couple. The tax benefits are only for Utah residents, though; out-of-state residents can invest, but don’t get the tax deductions.


Virginia is known for its low fees on its Virginia 529 plan. In addition, residents of Virginia can deduct up to $4,000 on their taxes each year. Investors can choose from active or passively managed funds.

Actively managed funds tend to be more aggressive as they are continually changed with the market. Passively managed funds follow a specific index and are typically left alone throughout the life of the investment.

Virginia does offer the option to invest some or all of your money in an FDIC-insured account. Of course, you won’t get the greatest return by doing this, so it may not make sense to put all of your money in one basket, so to speak. It does offer a virtually no-risk investment for your college funds, though.

South Carolina

South Carolina offers the largest deductions for a 529 plan available from any state. Investors can deduct up to $500,000 in contributions on their tax returns. On top of its generous tax deductions, South Carolina’s plans have low portfolio fees, no account fee or program management fee.

South Carolina offers three investment options:

  • Age-based portfolios
  • Target portfolios
  • Single-fund option

The South Carolina Future Scholar 529 plan is available to out-of-state residents, but you must use the Advisor Plan, which you purchase from a financial advisor. Anyone can make contributions to the South Carolina 529 plan and there’s no minimum to open an account.

Do your research and find the best plan that offers you the best return on your money, the lowest fees, and the most advantageous tax deductions. Oftentimes, you are best off opening an account in your own state to obtain the tax write-off. But you may also find that you’ll get benefits from opening an account in another state – a handful of states even offer tax benefits to out-of-state residents.