Santa Fe, NM — As families begin planning for 2025, a recent federal tax adjustment provides an opportunity for 529 plan contributors to jumpstart a child or grandchild’s 529 education savings account while utilizing gift tax exclusions, helping families invest more for the next generation. Effective for tax year 2025, the federal annual gift tax exclusion will increase from $18,000 in 2024 to $19,000 for a single individual and from $36,000 to $38,000 for married couples filing jointly. 

Contributions to a 529 education savings plan account for a beneficiary are considered gifts for tax purposes. In addition to benefits including flexible investment options and a range of qualified expenses, families can make up to five years’ worth of contributions to a 529 account in a single year and apply it against the annual gift tax exclusion equally over a five-year period. That means single individuals will be able to contribute up to $95,000 under the 2025 qualified exclusion limits, while married couples filing jointly can contribute up to $190,000 in one year. These tax year 2025 adjustments generally apply to income tax returns to be filed for the 2025 tax year, filing during tax season 2026, according to the IRS.  

Friends and relatives can also make gift contributions to a loved one’s 529 education savings plan and take advantage of the increased gifting limits in 2025. 

The Education PlanⓇ is a tax-advantaged 529 education savings program sponsored by the State of New Mexico and administered by the New Mexico Education Trust Board. 529 funds can be used to pay for education expenses at universities, colleges, trade schools, and professional schools. 529 plans offer flexibility, allowing funds to be used for a variety of qualified expenses including tuition, room and board, books, fees and computer equipment at eligible educational institutions nationwide. Funds may also be used to pay for K-12 tuition and apprenticeship expenses and more.  

“The IRS 2025 tax adjustments give families an opportunity to save even more for future education and help make contributing to a 529 education savings plan a helpful tool in planning ahead for your family’s future education,” said Natalie Cordova, Executive Director of the New Mexico Education Trust Board. “Whether you choose to utilize accelerated gifting or space your contributions out over a number of years, a 529 education savings plan is a worthwhile way to save for the future.”

For more information about The Education PlanⓇ and its tax advantages, visit www.TheEducationPlan.com.