Data: Half of Americans May Benefit From Using Out-of-State 529 Plans

Roughly half of Americans may find a better 529 college-savings plan outside their home state, according to an analysis of state-level data, as differences in tax incentives and fees reshape where families park education dollars. At the start of 2026, there were about 17.7 million open 529 accounts across the United States, holding more than $600 billion in aggregate savings, data from the College Savings Plan Network show [1]. A 529 plan is a tax-advantaged investment vehicle designed to encourage saving for future higher education expenses, and since 2017 has also covered K-12 tuition [2]. The plans are sponsored by individual states, but savers are free to open an account in any state, regardless of where they live [1].\n\nThat portability helps explain some striking geographic imbalances. New Hampshire, with roughly 370,000 residents aged 24 and under, counted nearly 1.2 million active 529 accounts [1]. Nevada, home to about 947,000 people in that age bracket, held $53.7 billion in 529 assets, compared with $19.2 billion in California, which has 12 million people under 25. The figures translate to roughly $56,677 saved per child in Nevada versus $1,594 in California [1].\n\nThe analysis, published by personal finance company NerdWallet, which earns revenue by promoting financial products, found that 56% of Americans live in states where there is no clear tax advantage to sticking with an in-state plan [1][5]. That group includes residents of the nine states with no income tax, which account for 21% of the U.S. population, as well as people in California, Hawaii, Kentucky and North Carolina — states that levy an income tax but offer no deduction or credit for 529 contributions [1]. Another nine states, including Arizona, Ohio and Pennsylvania, have “tax parity” laws that let residents claim a state tax benefit even if they invest in another state’s 529 plan [1].\n\nFees also vary widely. Only 16 of more than 100 plans have at least one investment option with fees below 0.1%, while nearly twice as many plans carry a minimum fee of at least 0.25%, according to the College Savings Plan Network [1]. Because 529 plans are administered by financial firms — Vanguard runs Nevada’s plan and Fidelity operates New Hampshire’s — brand loyalty can also steer savers across state lines [1].\n\nThe concentration of 529 assets mirrors broader patterns of wealth inequality in the United States, where the top 1% of households held 30.5% of the country’s wealth as of early 2024, while the bottom 50% held 2.5% [3]. Wealth, which includes savings and investments, provides long-term financial security and the ability to pass class status to the next generation [3].