When tax season arrives, many families wonder: How do I report 529 contributions on my tax return? The answer depends on whether you made contributions, took withdrawals, or exceeded the annual gift tax limits.
While 529 plans are relatively low-maintenance savings vehicles, there are times when account activity will need to be included on your tax return. Here’s what to be aware of this tax season if your family has a college savings plan:
1. Do you have to report 529 contributions on taxes?
If you’ve contributed to an existing 529 account, you may not have to report anything on your federal income tax return. Contributions to a 529 plan are not deductible on your federal taxes and do not have to be reported on federal income tax returns. Investment earnings in your account are not reportable until the year they are withdrawn.
Perhaps you took a distribution last year and received a Form 1099-Q from the plan – does this mean you have to report the earnings? It depends on what the withdrawal was used to pay for. You don’t have to report anything if the funds were spent on qualified education expenses or rolled into another 529 plan. However, 529 funds spent on purchases not falling into one of these two categories will be considered taxable withdrawals.
2. Report any taxable 529 plan withdrawals
Qualified education expenses include tuition, fees, books, computers, related technology, and some room and board costs for students attending an eligible college or university. Families can also take a tax-free distribution to pay for private, public, and parochial elementary and high school tuition expenses. This amount is limited to $10,000 per year, per beneficiary.
In recent years, new legislation has expanded the definition of qualified 529 plan expenses to include costs of apprenticeship programs and student loan repayments. In addition, unused funds in a 529 plan can be transferred to a beneficiary’s Roth IRA tax-free and penalty-free within certain limits. Qualified distributions for student loan repayments have a lifetime limit of $10,000 per beneficiary and each of their siblings.
529 withdrawals spent on other purchases, such as transportation costs or health insurance coverage, are generally considered non-qualified. In rare cases, these expenses are considered qualified only if the college charges them as part of a comprehensive tuition fee or if the fee is identified as “required for enrollment or attendance” at the college.
If you made non-qualified purchases last year, you must review your 1099-Q, which breaks out the basis and earnings portions. The earnings portion of a non-qualified withdrawal will be subject to income tax and a 10% penalty. The basis portion will never be taxed or subject to penalty because it comprises the amount you originally contributed with after-tax dollars.
Wondering how your 529 plan may impact financial aid? Use our Financial Aid Calculator to estimate your expected family contribution (EFC) and financial need.
3. Report 529 plan contributions above $19,000 on your tax return
The IRS considers contributions to 529 plans as gifts. In 2025, 529 contributions up to $19,000 for individuals or $38,000 for married couples filing jointly qualify for the annual federal gift tax exclusion. This limit increased from $18,000 and $36,000, respectively, in 2024.
Sometimes, families will make contributions that exceed this amount for estate planning purposes or other reasons. When that happens, you can take an election on your gift tax return to spread your contribution over five years. This will allow you to contribute up to $95,000 ($190,000 for married couples filing jointly) without generating a taxable gift.
You must file IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return if your contributions exceed the $19,000 annual gift tax exclusion.
4. Report 529 plan contributions on your state income tax return
You may be eligible for a 529 contribution state tax deduction if you use a 529 plan and pay state income tax. Over 30 states, including the District of Columbia, offer a full or partial tax credit or deduction on 529 plan contributions.
Most states only offer this benefit to residents who use their home state’s plan. Still, residents of Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio, and Pennsylvania offer taxpayers a state income tax deduction when they contribute to any state’s 529 plan.
5. Use your tax refund wisely
It may be tempting to splurge, but investing your refund in a 529 plan can give your child’s college fund a valuable boost. Wouldn’t you rather invest in your child’s future? This year, give your refund a chance to grow by depositing it into a 529 plan account. An upfront lump sum contribution is more likely to benefit from potential market gains over the long term than smaller recurring contributions.
But why stop there? You can deposit your tax refund and keep saving throughout the year. Many 529 plans offer affordable monthly contribution limits as low as $25 that can be automatically deposited straight from your checking account.
Even if you don’t need to report 529 contributions on your federal return, keep contribution records in case of future questions about withdrawals, state deductions, or gift tax reporting.
FAQs
Do I have to report 529 contributions on my federal tax return?
No. Contributions are made with after-tax dollars, so they aren’t deductible at the federal level and don’t need to be reported. However, contributions may qualify for state tax deductions or credits, and contributions above the annual gift tax exclusion must be reported on IRS Form 709.
Are 529 contributions tax deductible?
Not at the federal level. But more than 30 states, plus Washington, D.C., offer a tax deduction or credit for 529 contributions. Some states only allow this if you use your home state’s plan, while a handful (such as Arizona, Kansas, and Pennsylvania) allow deductions for contributions to any state’s plan.
What tax form do I need for 529 plan contributions?
There’s no federal tax form for contributions. You only report them if you exceed the annual gift tax exclusion, in which case you must file IRS Form 709. Withdrawals are reported on Form 1099-Q, and education credits are based on Form 1098-T from the school.
