What Are the Indiana 529 Contribution Limits?

A 529 plan is a savings account, named after Section 529 of the Internal Revenue Code, designed to encourage saving for future education costs. Anyone can open an account for a designated beneficiary, such as a child, grandchild, or even themselves. The money contributed can be invested, and any earnings grow free from federal income tax. When funds are withdrawn for qualified education expenses, those withdrawals are also federally tax-free. While the general structure is federal, each state can sponsor its own version with unique benefits, and Indiana offers the CollegeChoice 529 Direct Savings Plan.

Indiana State Tax Credit on Contributions

Indiana provides a tax incentive to its residents for contributing to a CollegeChoice 529 plan. Taxpayers in the state are eligible for a state income tax credit equal to 20% of their contributions. This credit directly reduces the amount of state income tax owed.

There is a cap on the amount of the credit an Indiana taxpayer can claim each year. The maximum credit is $1,500 per year, which requires a contribution of $7,500. For a married couple filing a joint return, this $1,500 credit applies to their combined contributions.

For those with different filing statuses, the limit adjusts. A married taxpayer filing a separate return can claim a maximum credit of $750, which would correspond to a contribution of $3,750. This limit relates only to the state tax credit and does not represent a ceiling on total annual contributions. An individual can contribute more than $7,500 in a year, but the portion of the contribution above that amount will not generate any additional state tax credit.

Federal Gift Tax Considerations for Contributions

When you contribute to a 529 plan, the Internal Revenue Service (IRS) considers it a completed gift to the account’s beneficiary, and federal gift tax rules apply. For 2025, an individual can give up to $19,000 to any single person, including a 529 beneficiary, without gift tax implications. This amount is known as the annual gift tax exclusion.

A married couple can combine their annual exclusions to give up to $38,000 to a single beneficiary in 2025. These contributions are made on a per-donor, per-beneficiary basis, meaning a grandparent could also contribute up to $19,000 to the same beneficiary’s account in the same year.

A feature of 529 plans is the ability to make a larger, lump-sum contribution by accelerating five years’ worth of gifts at one time. This strategy, called “superfunding,” allows a single contributor to deposit up to $95,000 in a single year. A married couple could contribute up to $190,000 jointly. To do this, the contributor must file IRS Form 709 for the year of the contribution and elect to treat the gift as being made over a five-year period.

Maximum Account Balance Limit

Indiana’s CollegeChoice 529 plan has a limit on the total value of an account. The state sets a maximum aggregate account balance limit, which is the total amount that can be held in all Indiana-sponsored 529 accounts for a single beneficiary. This limit is currently set at $450,000.

This figure includes both contributions and investment earnings. Once the total balance of all accounts for a beneficiary reaches this threshold, no further contributions will be accepted. The account can, however, continue to grow beyond $450,000 through market appreciation. Families saving for multiple children can have separate accounts for each, and each account is subject to its own $450,000 limit.