The Best 529 Plans in 2025 (And How to Pick One)

Saving for your child’s college education can feel overwhelming, but a 529 plan is one of the smartest tools available to help you get there. These tax-advantaged accounts are designed to grow your savings while minimizing your tax burden. In 2025, with inflation and tuition costs still rising, choosing the right 529 plan has never been more important.

What Is a 529 Plan?

A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. These plans are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

There are two main types of 529 plans:

• Prepaid Tuition Plans: Lock in today’s tuition rates at eligible public and private colleges and universities.
• Education Savings Plans: Invest in a range of options (stocks, bonds, mutual funds) to grow your savings over time.

Why Choose a 529 Plan in 2025?

In 2025, 529 plans remain a top choice for families planning for college due to:

• Tax-Free Growth: Earnings grow federally tax-free and are not taxed when used for qualified education expenses.
• State Tax Benefits: Many states offer tax deductions or credits for contributions.
• Flexibility: Funds can be used for college, K-12 tuition, apprenticeship programs, and even student loan repayments.

Top 529 Plans in 2025

Here are some of the highest-rated 529 plans this year based on fees, investment options, and state tax benefits:

1. Utah’s my529 Plan

Known for its low fees and broad investment choices, my529 remains a favorite among financial advisors. It’s available nationwide and does not require you to be a Utah resident.

2. Ohio’s CollegeAdvantage 529

Offers a wide range of investment options from Vanguard and DFA, with strong historical performance and low costs.

3. New York’s 529 Direct Plan

Managed by Vanguard, this plan features low costs, solid performance, and a $10,000 state tax deduction for NY residents (for married filers).

4. California’s ScholarShare 529

No annual account fees and a wide selection of low-cost investment portfolios. California doesn’t offer state tax deductions, but the plan is highly rated overall.

5. Virginia’s Invest529

Includes excellent investment choices and solid customer service. Virginia residents can claim a deduction up to $4,000 per account annually.

How to Choose the Right 529 Plan

Here are five steps to help you choose the best plan for your family:

1. Consider State Tax Incentives

Many states offer tax deductions or credits if you invest in their plan. If your state does, you might save more by sticking with your home plan.

2. Compare Investment Options

Look for plans that offer diversified portfolios, age-based options, and low fees. Consider well-known providers like Vanguard or Fidelity.

3. Evaluate Fees

Management fees and underlying fund expenses can eat into your earnings. Choose a plan with low costs and transparent fee structures.

4. Look at Historical Performance

Past performance isn’t everything, but it can give you an idea of how well a plan’s investments have done over time.

5. Think About Flexibility

Some plans allow you to change beneficiaries or use funds for other qualified education expenses. Make sure the plan fits your long-term goals.

Common Mistakes to Avoid

• Waiting Too Long to Start: The earlier you start, the more time your money has to grow.
• Not Checking Fees: High fees can eat up your investment over time.
• Ignoring State Tax Benefits: You might miss out on hundreds of dollars in tax savings each year.

Final Thoughts

A 529 plan is more than just a savings account—it’s a strategy. Whether you're a parent saving for a toddler’s future or a student funding your own education, choosing the right 529 plan in 2025 can make a big financial difference.

Review your options, start early, and contribute regularly—even small amounts add up over time. With the right plan in place, college savings won’t feel like a burden, but a smart investment in your child’s future.