A 529 plan lets your college savings grow completely tax-free when used for education. Plug in what you've saved, what you can add each month, and how many years you have — and watch compounding do the heavy lifting. See your projected balance, how much is your own contributions versus tax-free growth, and whether you're on track for your goal.
Tax-free college savings growth
The magic of a 529 plan isn't the contribution — it's what happens to the growth. In an ordinary brokerage account, every dollar of gains and dividends gets nibbled by taxes along the way. Inside a 529, that growth compounds untouched, and when you pull it out for tuition, books, room and board, or even up to $10,000 of K-12 tuition, you pay zero federal tax on the earnings. Over fifteen or eighteen years, that tax-free compounding can mean tens of thousands of extra dollars in the account — money that would otherwise have leaked away to the IRS.
Time is the other half of the equation, and it's why parents who start early win so decisively. A modest $300 a month started when a child is born has nearly two decades to grow; the same amount started in high school barely has time to do anything but pile up as raw contributions. The chart below splits your projection into two parts — the money you put in versus the growth that money earned — so you can literally see compounding take over the longer your time horizon runs.
On top of the federal break, more than 30 states offer a state income-tax deduction or credit for 529 contributions, which is essentially free money for residents. The figures here are a projection based on a steady average return; real markets bounce around year to year, so treat the result as a planning target rather than a promise. If you're behind your goal, the fix is usually simple: start sooner, add a little more each month, or stretch the timeline.
Earnings inside a 529 are never taxed when spent on qualified education — unlike a regular brokerage account.
The earlier you open it, the more of your final balance comes from growth instead of your own pocket.
Most states add an income-tax deduction or credit for contributions — check your home state's plan first.