Estate Planning
There are no state estate taxes on any 529 assets.
In addition to federal estate taxes, 12 states (Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont, Washington) and the District of Columbia each charge their own additional state estate taxes in various forms, up to 35%. The exemption limits vary widely–in some states the exemption was as low as $1 million in 2025. This makes 529 planning relevant well below the federal threshold for families in high-tax states.
There are NO state estate taxes on any 529 assets.
At the time of her death in 2026, Emily from Washington state owned a home worth $7 million, retirement accounts of $4.5 million, stock worth $2 million, and bank accounts of $1.25 million. She had also contributed a total of $500,000 to 529 accounts for several grandchildren. Because that $500,000 is exempt from estate tax, her taxable estate is $14.75 million rather than $15.25 million–keeping her just below the $15 million federal exemption threshold. This means her estate owes no federal estate tax and $100,000 less state estate tax (20% WA state estate tax above $3 million x $500,000 difference= $100,000 less).
No statement or example on this site should be considered a specific recommendation for your personal situation. Investing and tax strategies each carry significant risks. Examples herein may not apply to your situation. Please consult your estate attorney, tax advisor, or financial advisor for personal advice.