- How to choose a 529 plan
- Best overall: New York 529 Direct Plan
- Best for low fees: Utah My529
- Best for flexibility: Illinois Bright Start
- Best for Vanguard fans: Virginia Invest529
- States with the best tax deductions
- States with no deduction — best out-of-state options
- Side-by-side comparison
- Frequently asked questions
Every state in the US offers at least one 529 college savings plan — and you can open any state's plan regardless of where you live. That means you have 50+ options to choose from, with dramatically different investment lineups, expense ratios, and tax benefits.
The difference between a good and bad 529 plan can cost your family thousands of dollars over 18 years. A plan with 0.12% expense ratios vs one with 0.80% on a $50,000 balance costs an extra $340/year in fees — over $6,000 by the time your child starts college.
New to 529 plans? Start with our complete 529 plan guide before comparing specific plans.
How to choose a 529 plan
Three factors determine which 529 plan is right for your family:
34 states offer a state income tax deduction or credit for 529 contributions. If yours does, this is almost always your best first move — it's an immediate guaranteed return on your contribution. Check the table below to find your state's benefit.
Lower fees mean more of your money stays invested. Look for plans with index fund options under 0.15% expense ratio. Avoid advisor-sold plans with fees above 0.50% — the difference compounds dramatically over 18 years.
The best plans offer Vanguard, Fidelity, or Schwab index funds. Age-based portfolios that automatically shift from stocks to bonds as your child approaches college age are the simplest and often best option for most families.
Best overall: New York 529 Direct Plan
Why it's our top pick
The New York 529 Direct Plan is consistently rated the best 529 plan available for families who don't get a home-state tax deduction — or whose state's deduction doesn't make up for poor investment options. It offers Vanguard index funds at expense ratios as low as 0.12%, no account fees, and no minimum investment.
The investment lineup is excellent — total stock market index, international index, bond index, and age-based portfolios that automatically rebalance. For families who want simple, low-cost investing, this is the gold standard.
New York residents get an additional advantage: a state tax deduction of up to $5,000/year (single) or $10,000/year (married filing jointly). But even for non-New York residents, this plan's low fees make it one of the best options available.
What to watch out for
If your state offers a meaningful tax deduction for your own state's plan, calculate whether the deduction outweighs NY's fee advantage. For most states with deductions, contributing to your own state's plan up to the deductible limit — then using NY for additional contributions — is the optimal strategy.
Best for low fees: Utah My529
Why it's exceptional
Utah's My529 plan has among the lowest expense ratios of any 529 plan in the country — as low as 0.10% on some options. It offers both Vanguard and Dimensional Fund Advisors (DFA) investment options, giving families access to factor-based investing not available in most 529 plans.
Utah residents receive a state tax credit (not just a deduction) of 5% on contributions up to $2,070/year per beneficiary — a direct dollar-for-dollar reduction in state taxes owed, more valuable than a deduction. Non-Utah residents can also open the plan and benefit from its excellent investment options and low fees.
Best for flexibility: Illinois Bright Start
Why families love it
Illinois Bright Start combines low fees (as low as 0.11%), a generous state tax deduction for Illinois residents ($10,000 single / $20,000 married), and a broad investment lineup including Vanguard and iShares index funds. It's one of the few plans that competes with New York on both fees and investment quality.
Illinois residents with the $20,000 married deduction at a 4.95% state tax rate save $990/year in state taxes — that's a near-guaranteed return that's hard to beat anywhere else. Non-Illinois residents can also open the plan for its competitive fees.
Best for Vanguard fans: Virginia Invest529
Why it stands out
Virginia's Invest529 plan offers some of the lowest expense ratios available — 0.10% on Vanguard index fund options — and a clean, well-designed investment lineup. Virginia residents get a $4,000/year deduction per account (unlimited carryforward for excess contributions), and there's no income limit on the deduction.
The unlimited carryforward feature is particularly valuable for families making large lump-sum contributions — a $20,000 contribution can be deducted over five years, giving Virginia families a perpetual state tax advantage even if the annual deduction seems modest.
States with the best 529 tax deductions
If your state is on this list, contribute to your home state's plan first — up to the deductible amount — before considering out-of-state options.
Tax rates and deduction limits change annually. Verify current figures with your state's 529 program or a tax advisor before contributing.
States with no deduction — best out-of-state options
These states offer no 529 tax deduction or credit. Residents should open the best available plan based on fees and investment options alone — typically New York, Utah, or Illinois:
California offers no 529 state tax deduction, and California's own ScholarShare 529 has decent but not exceptional investment options. California residents are better served by opening New York's 529 Direct Plan or Utah My529 — both offer lower fees and better investment lineups with no disadvantage for California residents.
Side-by-side comparison — top 529 plans
See how much you need to save for college
Our free calculator shows exactly how much to contribute monthly to reach your college savings goal — at any expected rate of return.
Use the college savings calculator →Frequently asked questions
Yes — you can open any state's 529 plan regardless of where you live or where your child plans to attend college. The only reason to prefer your home state's plan is if it offers a state income tax deduction for contributions. If your state doesn't offer a deduction, or if its investment options are poor, choose the best plan available based on fees and investments — typically New York, Utah, or Illinois.
You have several options. You can change the beneficiary to another family member (sibling, cousin, even yourself) with no penalty. Since 2024, up to $35,000 of unused 529 funds can be rolled into a Roth IRA for the beneficiary — a significant improvement in flexibility. You can also withdraw the funds for non-education purposes, paying income tax plus a 10% penalty on earnings only (not on your original contributions). The Roth rollover option makes 529 plans significantly less risky than they used to be.
It depends on your college savings goal and when you start. For a child born today targeting $100,000 at a state school in 18 years, you'd need to contribute approximately $250–$280/month assuming 7% average annual returns. Use our college savings calculator to model your specific situation. Starting early matters enormously — the same $100,000 goal requires $430/month if you start when your child is 8.
For dedicated college savings, almost always yes. A 529 plan grows tax-free and withdrawals for education are tax-free — a regular savings account earning 4.5% APY has that interest taxed as ordinary income each year. On $50,000 over 18 years at 7% average growth, the tax savings in a 529 can add up to $15,000–$25,000 depending on your tax bracket. The only reason to prefer a savings account is if you're not sure the money will be used for education — in that case, a high-yield savings account offers full flexibility.
Yes — grandparents can contribute to a 529 plan owned by the parent, or open their own 529 plan with the grandchild as beneficiary. Important note: as of 2024, grandparent-owned 529 plans no longer impact the child's FAFSA financial aid calculation — a significant change that eliminated a previous disadvantage. Grandparents can also make lump-sum "superfunding" contributions of up to $90,000 ($180,000 for couples) per beneficiary using five years of gift tax exclusions at once.