529 Plans Compared in 2026: Fees and State Tax Breaks

For a $5,000 contribution held one year, the cheapest index option among the four state plans is ScholarShare's U.S. equity index, at $2.50 in fees. Counting the state tax break, a resident does best with Bright Start in Illinois, at $246.00 net. A 529 plan is a tax-advantaged savings account for education costs. Investment earnings grow free of federal income tax when withdrawals pay for qualified expenses such as college tuition, and some states let residents deduct part of what they contribute.

The four plans are ScholarShare (California), Invest529 (Virginia), Bright Start (Illinois) and the New York 529 Direct Plan. Each publishes a full fee table and its state tax rule on its own site, and every fee and state tax rule below comes from those pages. The scenario is one contribution held for a year, with an illustrative 5% state income tax rate, because a deduction is worth more in a higher bracket. Your own rate changes the dollar amounts, and at low rates it reorders Virginia against the other plans, as the section on where the ranking holds explains.

The four plans in one table

The table sorts the plans by the fee on each plan's broad U.S. stock index option. The net column is the state tax saved minus that fee on the same contribution. It counts only for residents of the plan's own state.

The index options are ScholarShare's Index U.S. Equity Portfolio, Invest529's Total Stock Market Index, Bright Start's Vanguard Total Stock Market Index 529 and the New York U.S. Stock Market Index Portfolio. Our analysis: across these four options the fee spread is $3.00 a year on the same contribution, but the state break on a resident's contribution is worth $200 to $250, so the tax rule moves the ranking far more than the fee does.

ScholarShare is cheapest on fees alone, but California gives no deduction, so its net is a small cost. Illinois beats New York by $1.50 because both plans cover the full contribution at 5%, and Bright Start's fee is $1.50 lower on that amount. Virginia's index fee is lower than both, yet its $4,000 cap costs a resident $50 of tax saving at 5%, which puts it third on net.

What a 529 plan costs

Each plan charges an asset-based fee, a percentage of the money in your account each year. None of the four lists an annual account maintenance fee in its fee table. The fee has two parts: the plan's own program or plan manager fee, and the expense ratio of the funds the plan holds. New York's Direct Plan puts its total at 0.11% a year, which it describes as $1.10 for every $1,000 invested. The fee cut took effect May 6, 2025, and the October 2026 supplement splits the total into 0.06% to 0.10% for program management and 0.01% to 0.05% for the underlying funds.

Because the fee is a percentage, a bigger balance pays more in dollars, and the gap between plans grows with it. Invest529 adds small fixed charges that you only meet when you use them: a $50 paper application, a $25 rollover to another plan and a $10 change of account owner. ScholarShare's page lists no enrollment or withdrawal fee.

What each state allows

New York. A single filer can subtract up to $5,000 a year from state taxable income, and a married couple filing jointly can subtract up to $10,000. The booklet counts every contribution across all of your Direct Plan accounts in a year, so a second account does not raise the cap. A New York taxpayer who lives elsewhere can still claim the deduction, but the plan says it is worth less to them than to a resident, so the table counts residents only.

Virginia. Invest529's tax page sets the deduction at $4,000 per account per year. The cap is per account, so a second account carries its own $4,000, though you should confirm that reading with a tax adviser. Taxpayers aged 70 and over can deduct the entire contribution in one year. The page says unused deductions carry forward without limit, subject to restrictions it does not spell out.

Illinois. A single filer can deduct up to $10,000 a year and a joint filer up to $20,000. The limit covers contributions across all accounts together, not per account. The Bright Start guide adds that a deduction taken for an accelerated gift does not carry forward to later years.

California. ScholarShare's own site says California gives no deduction for 529 contributions. The state benefit is limited to tax-free earnings on qualified withdrawals. For a California resident, the fee alone decides, and the plan's own page says non-qualified withdrawals may also face an additional 2.5% California tax on earnings.

For a resident, the state rule decides the order. Virginia's cap costs $50 of tax saving at 5% compared with Illinois or New York, and California offers none of the $250 that Illinois and New York would give at 5%. Residents of other states get no state break from these four plans, so the fee is the only cost to compare.

Age-based portfolios cost more

Age-based portfolios move toward bonds as the beneficiary nears college. In three of the four plans they cost more than the index option, and in New York they match it. Invest529's Target Enrollment 2045 option totals 0.301% a year, which is $30.10 on $10,000. New York's Target Enrollment 2045 option totals 0.11%, the same as its index fund. Bright Start's 2042/2043 enrollment-year option totals 0.09%, and ScholarShare's passive 2042/2043 option totals 0.07%.

These figures hold the balance flat to isolate the fee rate. A real account grows, so the same percentage costs more dollars each year. The gap in the rate is the part you control, and it grows with the balance.

Where the ranking holds

Against a state break, the $3.00 yearly fee spread across the four index options is small. Illinois stays ahead of New York at any state tax rate, because both plans allow the full contribution and Bright Start's fee is lower. Illinois stays ahead of Virginia at any rate above 0.09%, because it deducts $1,000 more of the contribution and that extra break outweighs the $0.90 gap in fees. New York beats Virginia only at rates above about 0.24%, because its fee is higher and its extra $1,000 of deduction has to cover that gap first.

At a 0% state rate, or for someone who gets no state deduction, the fee alone decides. The order is then California, Virginia, Illinois and New York, from cheapest to dearest. Check whether a plan accepts accounts from your state before you compare, because a fee table does not say who may open one.

Gotchas that change the cost

The costliest mistake is a withdrawal that does not pay for qualified expenses. Earnings are taxed as income and face a federal penalty. New York taxpayers also owe New York income tax on earnings and on any part of a distribution tied to a state deduction taken earlier, so the break can be recaptured. California adds the 2.5% tax on non-qualified earnings described above.

K-12 tuition is a second trap. Federal law allows up to $20,000 a year for K-12 tuition from January 1, 2026, but New York does not treat K-12 tuition as a qualified withdrawal. A New York taxpayer who pays K-12 tuition from the plan may owe state tax on the earnings.

Before you open a plan

This page is general information, not personalized financial advice. Confirm the current fees, deduction limits and eligibility rules with each plan before you invest, and ask a tax adviser how a deduction interacts with your own bracket and filing status.

If the 529 is a long-term goal, a taxable investing account gives you full flexibility to spend the money on anything, and our best robo-advisors guide compares those options. The Wealthfront vs Betterment comparison covers both robo platforms, including the 529 fee waiver Nevada residents get on Wealthfront. For money you may need within two years, a high-yield savings account keeps it liquid. Where to put cash in 2026 compares more options, and the savings hub lists the rest.

How we checked

Our analysis uses each plan's own pages, checked on October 10, 2026. The page covers four plans whose complete fee tables and state tax rules are printed on their own sites today.

• New York: the Direct Plan disclosure booklet, dated September 30, 2021, with the supplement dated October 2026. The fee change took effect May 6, 2025, and underlying fund fees are as of April 28, 2026.
• Virginia: Invest529 fees and expenses, as of August 31, 2026, and the Invest529 tax benefits page, which has no effective date.
• Illinois: Bright Start fees, with underlying expense ratios effective May 1, 2026, and the Bright Start Illinois taxpayer guide, which has no printed date.
• California: ScholarShare fees, effective July 1, 2026, and the ScholarShare homepage for the no-deduction and 2.5% statements.

The scenario uses three steps. Annual fee dollars equal the fee rate times the balance. Tax saved equals the deductible contribution times 5%. Net first year equals tax saved minus the fee. Every dollar figure is rounded to the cent.

FAQ

What is a 529 plan?

A 529 plan is a savings account run by a state or its agent for education costs, including college, certain K-12 tuition and apprenticeship programs. Earnings grow free of federal tax when withdrawals are qualified, and the account owner, not the child, controls the money and can change the beneficiary.

Which 529 plan has the lowest fees?

Among the four plans here, ScholarShare's Index U.S. Equity Portfolio has the lowest total, at 0.05% a year, effective July 1, 2026. Its fee is low, but a plan's fee table does not say who may open an account, so check the eligibility rules before you choose it.

Does a 529 plan help if my state gives no deduction?

Yes, but the help is tax-free growth on qualified withdrawals, not a state break. Without a deduction, the fee decides. On these four index options that is between $2.50 and $5.50 a year on the same contribution, which is far smaller than the state break a New York or Illinois resident gets at 5%.

Can a 529 plan pay for K-12 tuition?

Federal law allows up to $20,000 a year for K-12 tuition from January 1, 2026. New York does not count K-12 tuition as a qualified withdrawal, so a New York taxpayer may owe state tax on the earnings even when the federal rule applies.

How much can I put into a New York 529 plan?

The New York Direct Plan caps each beneficiary's total balance at $520,000. The state deduction covers up to $5,000 a year for a single filer and $10,000 for a joint filer, counted across all accounts.