As 2025 starts, let’s review of some of the many benefits of saving for your children's and grandchildren's college and career training in Ohio 529, CollegeAdvantage. The list includes the power of compound interest, a wide variety of investment options, tax-free earnings, and tax-free withdrawals. For Ohioans saving with Ohio 529, there’s also a deduction from their state taxable income for Ohio 529 contributions of up to $4,000 per year, per beneficiary.
State tax deduction is $4,000 for Ohio 529 contributions
For Ohio residents, you will receive an up-to $4,000 deduction of your State of Ohio income taxes for matching contributions to an Ohio 529 account, heightening the tax advantages of saving for college and career training costs in Ohio 529. Other tax benefits include tax-free earnings and tax-free withdrawals on qualified higher education expenses. And these tax savings apply in your Ohio 529 account at whatever school comes after high school for for your children and grandchildren—including four-year colleges and universities, community colleges, tech, trade or vocational schools, apprenticeships, and certificate programs.
The $4,000 deduction limit is not a contribution cap. For Ohioans who contribute over $4,000 per account, per year, they can carry forward this deduction to their Ohio adjusted gross income for subsequent tax years until all of their contributions are fully deducted.
To illustrate the unlimited carry forward of the Ohio state income tax deduction, let’s use two examples. An Ohio taxpayer contributes $4,000 to two 529 accounts for each of her two children, for a total of $8,000. She could deduct a total of $8,000 from her Ohio taxable income for the year. Or, if an Ohio taxpayer contributed $8,000 to a CollegeAdvantage Direct Plan Account for one child in one year, he could deduct $4,000 from his Ohio taxable income during the current year, and also the next year.
Account limit for contributions increases
The Account Limit for Contributions is limit for total value of all Ohio CollegeAdvantage 529 Program accounts for a single beneficiary. Once this amount is reached, no additional contributions may be made to any account for this beneficiary in any plan within CollegeAdvantage.
As of Jan. 1, 2025, the limit will be $555,000. This limit is calculated based on the sum of the current average cost of tuition and current average cost of room and board needed for seven years at the five U. S. highest-cost eligible educational institutions. This amount is adjusted annually to take into estimated future inflation and estimated account earnings.
Annual gift tax exclusion rises
Contributions to a CollegeAdvantage Direct Plan Account are generally considered completed gifts for federal tax purposes. There are no federal gift tax consequences under a certain dollar amount. In 2025, the annual gift exclusion amount is $19,000 ($38,000 for a married individual who elects to split gifts with his or her spouse or for a gift of community property). Please consult with your tax or financial advisor first.
You may also choose to contribute up to $95,000 of the contributions ($190,000 for married couple) as having been made ratably over a five-year period without any tax consequences. If you decide to do five-year option, please consult with your tax or financial adviser first.
Use our tools and calculators to set your college savings goals, see the benefits of saving in a 529 plan when compared to a taxable savings account; and review how saving early as possible promotes growth in the account.
Since 1989, Ohio 529 has been helping families across the nation save for their children’s higher education. Ohio 529 covers qualified costs for your child’s college or career training. Start, add, or give a gift with as little as $25 at CollegeAdvantage.com.
This article was originally posted in December 2018 and has been updated to reflect new information for 2025.
