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529 Savings Calculator
Saving for college and wondering what the tax shelter is really worth? This 529 savings calculator projects your tax-free growth beside an ordinary taxable account, so the advantage shows up in real dollars.
See how this works on a $300-a-month 529 plan — 3 real examples
Projected 529 balance at enrollment
$0
You'll contribute
$0
Tax-free growth
$0
Tax savings vs taxable
$0
Balance at enrollment: 529 vs a taxable account
Tax-free 529 vs taxable growth over time
Year-by-year growth: 529 vs taxableContributions, both balances and the running tax savings
| Year | Contributed to date | Tax-free 529 | Taxable account | Tax savings |
|---|
How your 529 growth and tax savings are calculated
Your current balance and every monthly contribution are grown at your expected return with monthly compounding — the standard future-value of a starting sum plus a contribution stream:
529 balance = balance·(1 + i)n + PMT·((1 + i)n − 1) / i
where i is the monthly rate (return ÷ 12), n the number of months and PMT your monthly contribution. Because a 529 pays no tax on qualified education withdrawals, the full return compounds — that’s the tax-free 529 line. Total contributions is your starting balance plus every deposit; tax-free growth is the ending balance minus those contributions.
The taxable-account comparison uses the standard annual-tax-drag approximation: it compounds the same contributions at a reduced rate of return × (1 − tax). Taxing each year’s gains at your entered rate is modeled as a permanent drag on the growth rate, which is a simplification — a real brokerage account’s tax depends on turnover, dividends and when you sell. The tax savings is simply the tax-free 529 balance minus this taxable balance.
This tool is deliberately generic. It applies no state tax deduction on contributions and does no tax-liability math — the tax rate is only the drag it puts on the taxable comparison. It also assumes your withdrawals are qualified education expenses so the 529 growth is genuinely tax-free; confirming that, and your state’s specific 529 rules, is up to you.
$300 a month, three starting lines
The same plan — $5,000 down, $300 a month at 6% — begun 18, 15 and 8 years before the first tuition bill.
Begun at birth: 18 years of runway
at enrollment$130,890
- $69,800 goes in; tax-free compounding adds $61,090 on top — growth nearly matches the deposits.
- The same money in a taxable account at a 15% drag reaches $118,338.
- Skipping the annual tax on gains is worth $12,552 by the first tuition bill.
The wrapper pays best when it has the longest to work — time is doing most of the lifting.
Load this example (opens in a new tab)The middle start: 15 years at 6%
at enrollment$99,516
- $5,000 to start and $300 a month put in $59,000 across the fifteen years.
- Untaxed growth of $40,516 carries the balance to $99,516.
- Beside it, the taxable twin stops at $91,587 — the 529 keeps the $7,929 difference.
No extra dollar was deposited in the 529 — the $7,929 came from taxes never paid.
Load this example (opens in a new tab)A later start: eight years to enrollment
at enrollment$44,919
- The same $300 a month now totals $33,800 in, with $11,119 of tax-free growth.
- The taxable twin lands at $42,984, and the tax advantage adds up to $1,936.
- An 18-year start earns more than six times the tax savings of an 8-year start.
The math still works, only smaller — every year of delay quietly shrinks the tax break.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
How a 529 turns tax-free growth into college dollars
- The tax break is the whole point. A taxable account loses a slice of its return to tax every year; a 529 doesn’t, and that skipped drag compounds into the tax-savings figure above.
- Start early, contribute steadily. Years until enrollment is the most powerful slider here — the same monthly deposit started at birth instead of age 8 ends up worth dramatically more, because tax-free compounding has longer to work.
- A higher tax rate widens the gap. The more a taxable account would owe on its gains, the bigger the 529’s advantage — drag the tax slider to see how much the tax-free wrapper is worth to you.
- Contributions do most of the early lifting. In the first years your balance is mostly the money you put in; growth — and the tax savings on it — takes over in the back half.
- Qualified withdrawals keep it tax-free. Tuition, fees, books, and room and board qualify. Spending on non-qualified costs taxes the earnings and usually adds a penalty, so match withdrawals to education bills.
Not sure how big your target should be? Project the future price of a degree in our College Cost Calculator.
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Frequently asked questions
What is a 529 college savings plan?
A 529 plan is a state-sponsored investment account built for education. You contribute after-tax dollars, the money is invested (usually in age-based or index portfolios), and it grows without being taxed each year. When you withdraw for qualified education expenses — tuition, fees, books, room and board — the growth comes out tax-free too. This calculator models that tax-free growth and compares it against an ordinary taxable account.
How does tax-free growth in a 529 work?
In a taxable brokerage account, dividends and realized gains are taxed most years, which quietly drags on your return. In a 529, none of that annual tax applies, and qualified withdrawals are never taxed on the gains. Over 15–18 years that difference compounds: at 6% with a 15% tax drag, the taxable version might grow to tens of thousands less than the identical 529. The "tax savings" figure above is exactly that gap.
How much should I contribute to a 529 each month?
Start from your target — the projected cost of the schools you have in mind — and work backwards. A common approach is to fund a meaningful share of that goal from the 529 and cover the rest from income, scholarships and aid. Use the monthly contribution slider to find a number that reaches a balance you are comfortable with; even $200–$300 a month started early grows substantially because of the long compounding runway.
Is a 529 better than a regular taxable investment account?
For money earmarked for qualified education, a 529 usually wins because it removes the annual tax drag and taxes nothing on qualified withdrawals. A taxable account is more flexible — you can spend it on anything without penalty — but you pay tax on gains along the way. The side-by-side chart on this page quantifies the trade-off in dollars for your own numbers, so you can weigh tax savings against flexibility.
Can I deduct 529 contributions on my state taxes?
Many states offer a deduction or credit for 529 contributions, but the rules vary widely by state and some states offer nothing at all. This calculator deliberately stays generic and does not model any state deduction — the tax rate here is only the drag it applies to the taxable-account comparison, not a tax-liability calculation. Check your own state’s 529 program for its specific deduction rules.
What happens to leftover 529 funds?
Unused 529 money has several outlets: change the beneficiary to another family member, use it for graduate school or up to $10,000 of student-loan repayment, or roll a limited amount into a Roth IRA for the beneficiary under recent rules. Non-qualified withdrawals of earnings are taxed and typically carry a 10% penalty. Rules change, so confirm current limits with your plan before counting on any of these options.
How much will my 529 grow?
It depends on your starting balance, monthly contribution, the years until enrollment and your expected return. In the default scenario — $5,000 to start, $300 a month for 15 years at 6% — the 529 grows to roughly six figures, most of it from contributions early on and from tax-free growth later. Drag any slider to see your own projection and the running tax advantage over a taxable account update instantly.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .