Illinois 529 Plan And College Savings Options
Illinois's 529 plan for do-it-yourself savers is Bright Start, and for most Illinois families it's the right account. The state tax deduction of up to $10,000, or $20,000 on a joint return, only applies to Illinois's own plans, and Bright Start's passive portfolios cost under 0.10% a year, so there's little reason to look elsewhere. Watch two Illinois-specific traps: K-12 tuition and credential-program withdrawals count as non-qualified on your Illinois return, and rolling money to another state's plan claws back past deductions. If you're new to these accounts, start with how 529 plans work.
Illinois 529 Plans At A Glance
| Plan | Type | Annual Cost | Who It's For | Status |
|---|---|---|---|---|
| Bright Start Direct-Sold College Savings Program | Direct-sold savings plan | 0.08%–0.09% on passive enrollment year portfolios; 0.06%–0.785% across all portfolios | Families who open and manage the account themselves | Open |
| Bright Directions Advisor-Guided 529 College Savings Program | Advisor-sold savings plan | 0.15% in program and state fees plus fund expenses and a sales charge (up to 2.50% up front) | Families who want a financial advisor to pick investments | Open |
| College Illinois! 529 Prepaid Tuition Program | Prepaid tuition plan | No new contracts offered on the program's site | Existing contract holders | Not enrolling |
Illinois 529 Tax Deduction And Tax Rules
Illinois lets you deduct up to $10,000 a year in contributions to Bright Start, Bright Directions, and College Illinois combined, or $20,000 on a married-filing-jointly return, and contributions to any other state's 529 plan don't qualify (Illinois Department of Revenue). The Department of Revenue has said the deduction is open to Illinois taxpayers other than the account owner, so a grandparent who contributes can claim it (Bright Start). Our state-by-state 529 tax deduction table shows how that compares with neighboring states.
Money rolled in from another state's plan counts toward the deduction only for its contribution portion, not its earnings (Bright Start). Growth is tax-deferred and qualified college withdrawals are tax-free, including withdrawals for an out-of-state college, which our list of qualified 529 plan expenses breaks down.
| Situation | Illinois Tax Treatment |
|---|---|
| Contribution to Bright Start, Bright Directions, or College Illinois! | Deductible up to $10,000 per return, $20,000 for married filing jointly, across all three plans combined |
| Contribution to another state's 529 plan | No Illinois deduction |
| Qualified college withdrawal (any accredited school, in or out of state) | Tax-free |
| K-12 tuition and expenses | Non-qualified for Illinois: prior deductions are added back and earnings are taxable, even though federal law allows up to $20,000 a year starting in 2026 |
| Student loan repayment | Tax-free up to $10,000 lifetime per borrower |
| Registered apprenticeship costs | Tax-free |
| Non-qualified withdrawal | Previously deducted contributions added back to Illinois income; earnings taxed |
| Contribute and withdraw right away (529 churning) | Allowed; no holding period, so the deduction applies even if the money pays a qualified expense soon after |
| Rollover from an Illinois plan to another state's plan | Previously deducted contributions are recaptured |
| Rollover from another state's plan into an Illinois plan | Tax-free; the contribution portion is deductible, the earnings portion isn't |
| 529-to-Roth IRA rollover | No Illinois income tax or penalty |
Illinois doesn't require money to stay in a Bright Start account for any set period before you use it. The Department of Revenue's guidance and the Bright Start Plan Description tie recapture only to non-qualified withdrawals and rollovers to other states' plans, and neither sets a holding period (Bright Start Plan Description; Illinois Department of Revenue). Illinois families paying tuition out of pocket can route up to $10,000 ($20,000 joint) through Bright Start first and still claim the deduction, a move states like Wisconsin and Montana have blocked, as our breakdown of 529 plan churning and withdrawal limits explains.
Roth rollovers are treated gently. Federal law lets a 529 that's been open at least 15 years roll up to $35,000 into the beneficiary's Roth IRA, and the plan's January 2026 supplement says these rollovers carry no federal or Illinois income tax or penalty (Bright Start Plan Description). Read our 529-to-Roth IRA rollover rules before you move leftover money.
The K-12 rule is where Illinois breaks from federal law. Withdrawals for K-12 expenses or postsecondary credential programs aren't qualified withdrawals for Illinois tax purposes, so they trigger the same recapture as any non-qualified withdrawal, while student loan and apprenticeship withdrawals stay tax-free in Illinois (Bright Start Plan Description; Bright Start). Our breakdown of the 2026 529 plan expansion covers what changed federally.
How Illinois's 529 Plan Ranks
Illinois ranks 18th of the 50 state plans in our best 529 plans rankings, which include Washington, D.C., with a 65.9% net return on investment. Our Net ROI score models $100 a month for 10 years at a 5% annual return, subtracts plan fees, and reinvests the value of the state tax break each year. Bright Start's 0.0825% fee is one of the lower ones in the table, and its 5% tax break is what keeps it out of the top 10.
| State | Fees (Basis Points) | State Tax Break | Net ROI |
|---|---|---|---|
| Indiana (#1 overall) | 12.5 | 20% | 87.8% |
| Wisconsin | 4 | 7.7% | 70.6% |
| Illinois (#18) | 8.25 | 5% | 65.9% |
| Missouri | 15 | 4.7% | 64.4% |
| Iowa | 14 | 3.8% | 63.2% |
| Kentucky | 35 | 0% | 54.3% |
Don't read this table as a reason to switch plans. Each state's score assumes a taxpayer in that state using its own plan, so an Illinois resident who moves to Wisconsin's plan gives up the Illinois deduction to save about 0.04% a year in fees, which leaves them worse off. The ranking shows what a dollar is worth inside Bright Start compared with what families in other states get, and the full rankings table lists all 50 state plans.
The gap with the top of the list comes down to the lever Illinois hasn't pulled. Indiana's 20% tax credit is what puts it at #1, and Bright Start's fees are already low, so a larger deduction or a credit is what would move Illinois families up. If that matters to you, share these numbers with your state legislators, and use our 529 plan tax deductions by state table to show how other states reward savers.
Should Illinois Residents Use Bright Start?
Yes, for nearly every Illinois taxpayer who picks their own investments. A resident who uses another state's plan gets no Illinois deduction, and Bright Start's passive portfolios already cost 0.08% to 0.09% a year, so a plan elsewhere can't win on fees by enough to matter (Bright Start). Our 529 plan tax deductions by state table shows how Illinois's break compares.
Families who already hold another state's plan can roll it into Bright Start and deduct the contribution portion, and our explainer on 529 plan rollovers and transfers covers the once-per-year federal limit. Nonresidents can open Bright Start too, since the plan has no residency requirement (Bright Start), but they should first check where to open a 529 plan in their own state.
Four years at an in-state Illinois public university runs close to $115,000 on campus, so the average Bright Start balance of about $44,300 covers about a year and a half. Our Illinois college costs and financial aid breakdown lists costs by school, and our 529 savings benchmarks by age show what to aim for.
Illinois 529 Plan Details
The Illinois State Treasurer sponsors Bright Start and Bright Directions, while the Illinois Student Assistance Commission runs College Illinois (Bright Start Plan Description; 110 ILCS 979/15). As of June 30, 2026, Illinois's three programs held $26.71 billion across 675,147 open accounts, ranking Illinois 6th among the states in 529 assets (The 529 Network). Our 529 plan and college savings statistics show how that compares nationally.
| Illinois Plan (June 30, 2026) | Open Accounts | Assets | Average Balance |
|---|---|---|---|
| Bright Start (direct) | 375,415 | $16.63 billion | $44,294 |
| Bright Directions (advisor) | 288,908 | $9.72 billion | $33,642 |
| College Illinois! (prepaid) | 10,824 | $363.0 million | $33,536 |
| All Illinois 529 plans | 675,147 | $26.71 billion | $39,563 |
Bright Start Direct-Sold College Savings Program
This is the plan to open if you're managing the account yourself. TIAA took over as program manager on September 30, 2024, and the switch to enrollment year portfolios came with a 13% cut in average asset-weighted fees (Illinois State Treasurer). Passive enrollment year portfolios now cost 0.08% to 0.09% all-in, which on a $44,294 balance, the plan's average as of June 30, 2026, is about $35 to $40 a year, and our 529 balance by age benchmarks can put that balance in context.
| Program manager | TIAA-CREF Tuition Financing, Inc. (TIAA) |
| Minimum contribution | None; any dollar amount |
| Maximum account balance | $550,000 per beneficiary across all Illinois 529 programs, effective January 31, 2026 |
| All-in annual cost | 0.08%–0.09% (passive enrollment year); 0.245%–0.425% (active blend enrollment year); 0.07%–0.385% (static); 0.06%–0.785% (individual portfolios) |
| Investment options | 40 enrollment year portfolios (20 passive, 20 active blend), 6 static allocation portfolios, 18 individual portfolios |
| Fund families | Vanguard, BlackRock, DFA, Dodge & Cox, T. Rowe Price, State Street, Nuveen, Goldman Sachs, Ariel, Parnassus, and others |
| Who can open | Anyone 18 or older with a Social Security or taxpayer ID number; no residency requirement |
| Official source | brightstart.com |
Bright Directions Advisor-Guided 529 College Savings Program
Bright Directions uses the same Illinois tax rules but costs more because it pays the financial advisor who sells it. Families who want professional help should compare the total cost against a fee-only planner, and our list of the best brokers to open a 529 plan shows the self-directed options. Union Bank and Trust manages the plan under a term that runs through November 2034 (Bright Directions Program Disclosure Statement).
| Program manager | Union Bank and Trust Company; distributed by Northern Lights Distributors, LLC |
| Program management fee | 0.125%, plus a 0.025% state administrative fee and underlying fund expenses of 0.03%–0.27% |
| Sales charges | Fee Structure A carries a 2.50% up-front charge and a 0.25% annual fee; C has no up-front charge and a 0.50% annual fee; E has a 0.25% annual fee; F has neither |
| Account fee | $12 a year, waived with electronic delivery |
| Investment options | More than 50 portfolios, including age-based, enrollment year, static, individual fund, and ETF portfolios |
| Maximum account balance | $550,000 per beneficiary across all Illinois 529 programs |
| Official source | brightdirections.com |
College Illinois! 529 Prepaid Tuition Program
College Illinois is a prepaid tuition plan run by the Illinois Student Assistance Commission (110 ILCS 979/15). The program's website serves existing contract holders, posting payout rates for private and out-of-state schools, and doesn't offer new contracts (College Illinois), which our prepaid tuition vs. 529 plan comparison explains in more detail.
| Administered by | Illinois Student Assistance Commission |
| Covers | Tuition and fees under each contract's terms, with set payout rates for private and out-of-state schools |
| Status | Not enrolling new contracts; existing contracts are still paid |
| Official source | collegeillinois.org |
Other Illinois College Savings Programs
Upromise. Upromise lets you earn money for your Bright Start account through rebates and rewards on everyday spending, and the Upromise credit card sends cash back straight into your child's 529 plan (Upromise). You can link a Bright Start account to your Upromise profile, so the rewards stack on top of Illinois's state tax deduction.
Illinois First Steps. Illinois sets aside a $50 seed deposit for every child born or adopted on or after January 1, 2023, to an Illinois resident parent, and families can claim it online and move it into a Bright Start account by the child's 10th birthday (Bright Start; Bright Start Plan Description). The money can only pay for higher education, and our 529 plan overview shows how a small seed grows over time.
Employer contribution credit. Illinois employers that contribute to employees' Illinois 529 accounts can claim a state tax credit, which the legislature extended through tax years ending on or before December 31, 2029 (Bright Start Plan Description). Ask your HR department whether it participates, and see our 529 plan contribution limits for how employer money counts.
Illinois ABLE. Illinois residents with disabilities can save in IL ABLE, a 529A account sponsored by the Illinois State Treasurer with Ascensus as program manager (IL ABLE). ABLE accounts protect eligibility for SSI and Medicaid, which our 529 plan overview compares with regular college savings.
Leftover money. Families with money left after college can change the beneficiary to a sibling, pay down up to $10,000 of student loans, or roll to a Roth IRA without Illinois tax. Our list of what to do with leftover 529 money covers each option, and Illinois graduates in teaching or health care should also check Illinois student loan repayment assistance programs.
Frequently Asked Questions
What Is The Illinois 529 Plan Called?
Illinois's direct-sold 529 plan is Bright Start, and its advisor-sold plan is Bright Directions, both sponsored by the State Treasurer. The College Illinois prepaid plan serves existing contract holders, and our 529 plans by state hub lists every state's plans.
Is The Illinois 529 Plan Tax Deductible?
Yes. Contributions to Illinois's 529 plans are deductible up to $10,000 a year, or $20,000 on a joint return, across all three plans combined (Illinois Department of Revenue). Contributions to other states' plans don't qualify, which our state 529 tax deduction table shows state by state.
Can Grandparents Get The Illinois 529 Deduction?
Yes, if they file an Illinois return and contribute to an Illinois 529 account. The Department of Revenue has said the deduction is available to Illinois taxpayers other than the account owner (Bright Start), and our breakdown of how 529 plans work covers who can own and fund an account.
Can I Use An Illinois 529 Plan At An Out-Of-State College?
Yes. Withdrawals for qualified higher education expenses at any eligible school, in or out of state, are free of federal and Illinois income tax (Bright Start Plan Description). The list of qualified 529 plan expenses is the same no matter where the school is.
Can I Contribute To An Illinois 529 Plan And Withdraw Right Away?
Yes. Illinois has no holding period, so you can deduct a Bright Start contribution and use it for a qualified college expense shortly after (Bright Start Plan Description). Don't use this move for K-12 tuition, which Illinois treats as non-qualified, and see which states restrict churning in our 529 plan churning breakdown.
What Happens If I Withdraw Illinois 529 Money For Non-Qualified Expenses?
Illinois adds any contributions you previously deducted back to your Illinois income (Bright Start). The earnings also face federal income tax and the 10% federal penalty, which our explainer on the 529 plan penalty shows how to avoid.
Can I Use My Illinois 529 Plan For Private K-12 School?
You can, but Illinois taxes it. Federal law allows up to $20,000 per beneficiary per year for K-12 expenses starting in 2026, while Illinois treats those withdrawals as non-qualified, adding back prior deductions (Bright Start Plan Description). Our walkthrough on using a 529 plan for private school covers the paperwork.
Related Illinois Resources
How We Sourced This Data
Plan details on this page come from the plans and the state: the Bright Start website, fee page, FAQ, and taxpayer page, the Bright Start Plan Description (September 30, 2024) with supplements dated January 1 and July 1, 2026, the Bright Directions Program Disclosure Statement (September 2026), the Illinois State Treasurer's September 2024 program announcement, the Illinois Prepaid Tuition Act (110 ILCS 979), the College Illinois and IL ABLE websites, and The 529 Network 529 plan data as of June 30, 2026. Tax rules come from the Illinois Department of Revenue's 529 deduction guidance and the Bright Start Plan Description. The college cost figure comes from our Illinois financial aid page, which draws on institutional cost pages and NCES IPEDS data. Read more about how we fact-check and update content.
Page refreshed annually in September, after Bright Start publishes its updated fee schedule, and reviewed in January for tax season. Last full refresh: September 24, 2026.
Editor: Clint Proctor Reviewed by: Chris Muller
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