Tennessee 529 Plan Rules And College Savings Options
Tennessee's 529 plan is TNStars, a direct-sold plan the state Treasury runs itself, and its age-based portfolios cost about 0.23% a year. Tennessee has no income tax, so TNStars offers no deduction and residents are free to shop any state's plan on cost. The reason to stay in-state is the TIPS match, which adds $4 for every $1 an eligible family saves, up to $1,500 per child. Families who don't qualify for TIPS should compare TNStars with the lowest-cost plans in our best 529 plans rankings.
Tennessee 529 Plans At A Glance
| Plan | Type | Annual Cost | Who It's For | Status |
|---|---|---|---|---|
| TNStars College Savings 529 Program | Direct-sold savings plan | 0.229%–0.237% on age-based portfolios; 0.220%–0.860% on self-selected portfolios | Families who manage the account themselves, especially those eligible for the TIPS match | Open |
Tennessee 529 Tax Rules
Tennessee has no tax on wage income, and the Hall income tax on interest and dividends was repealed for tax periods beginning on or after January 1, 2021 (Tennessee Department of Revenue). That means there's no deduction for TNStars contributions and no state tax on 529 withdrawals of any kind. Our state-by-state 529 tax deduction table shows what residents of income-tax states get instead.
Federal rules still apply to every Tennessee account. Growth is tax-deferred, qualified withdrawals are federally tax-free, and non-qualified earnings face federal income tax plus the 10% penalty, which our list of qualified 529 plan expenses helps you avoid.
| Situation | Tennessee Tax Treatment |
|---|---|
| Contribution to TNStars | No deduction; Tennessee has no state income tax |
| Contribution to another state's 529 plan | No deduction; no state income tax |
| Qualified college withdrawal (any accredited school, in or out of state) | No state tax; federally tax-free |
| K-12 tuition and expenses | No state tax; federal limit of $20,000 per beneficiary per year starting in 2026 |
| Student loan repayment | No state tax; federal limit of $10,000 lifetime per borrower |
| Registered apprenticeship costs | No state tax; federally tax-free |
| Non-qualified withdrawal | No state tax or recapture; earnings face federal income tax and the 10% federal penalty |
| Contribute and withdraw right away (529 churning) | No state deduction to lose; TNStars holds each contribution 21 calendar days before it can be withdrawn |
| Rollover from TNStars to another state's plan | No state tax or recapture |
| Rollover from another state's plan into TNStars | No state tax |
| 529-to-Roth IRA rollover | No state tax; federal rules apply |
Churning has no tax angle in Tennessee because there's no state deduction to claim. The only timing rule is operational: TNStars holds each contribution for 21 calendar days, or 15 business days, before the money can be withdrawn (TNStars Disclosure Brochure). Plan around that hold when a tuition bill is due, and see how states like Wisconsin and Montana limit deductions in our breakdown of 529 plan churning and withdrawal limits.
Roth IRA rollovers carry no Tennessee tax. The federal rules still apply: the 529 must be open at least 15 years, and the beneficiary can move up to $35,000 over a lifetime, which our 529-to-Roth IRA rollover rules cover in detail.
With no income tax, Tennessee has nothing to conform or decouple, so the 2026 federal changes, including the $20,000 K-12 limit and new credential expenses, carry through for Tennessee residents. The April 2026 TNStars brochure added the expanded withdrawal categories (TNStars Disclosure Brochure), and our breakdown of the 2026 529 plan expansion covers what changed federally.
How Tennessee's 529 Plan Ranks
Tennessee ranks 43rd of the 50 state plans in our best 529 plans rankings, which include Washington, D.C., with a 56.5% 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. Tennessee's score is fee-driven because it has no tax break, and our model counts a 0.20% plan fee.
| State | Fees (Basis Points) | State Tax Break | Net ROI |
|---|---|---|---|
| Indiana (#1 overall) | 12.5 | 20% | 87.8% |
| Virginia | 5 | 5.8% | 67.6% |
| Georgia | 2 | 5% | 66.9% |
| Alabama | 17 | 5% | 64.5% |
| Missouri | 15 | 4.7% | 64.4% |
| Arkansas | 48 | 3.7% | 57.8% |
| Tennessee (#43) | 20 | 0% | 56.5% |
| Mississippi | 60 | 4% | 56.4% |
| North Carolina | 25 | 0% | 55.8% |
| Kentucky | 35 | 0% | 54.3% |
Most neighbors rank higher because their residents get a state tax break, which Tennesseans can't use. TNStars has no home-state tax edge, so a Tennessee family that doesn't qualify for the TIPS match should compare its all-in cost with other states' direct plans. Our full rankings table lists all 50 state plans with their fees.
The levers here are different from income-tax states. Tennessee can't add a tax break without an income tax, so lower fees and a wider match are the ways to raise the plan's value, and the state already subsidizes TNStars' operating costs. If that matters to you, share these numbers with your state legislators, and use our 529 plan tax deductions by state table to see how other states reward savers.
Should Tennessee Residents Use TNStars?
Yes, if you qualify for TIPS, because a 4-to-1 state match beats any fee difference. Tennessee children 14 or younger in households under the income limits, such as $82,500 in federal AGI for a family of four in 2026, can get up to $500 a year and $1,500 over a lifetime (Tennessee Department of Treasury). Families above the limits have no tax reason to stay, so our explainer on where to open a 529 plan shows how to compare.
Families who already hold another state's plan can roll it into TNStars, or roll TNStars out, with no Tennessee tax either way. Our explainer on 529 plan rollovers and transfers covers the once-per-year federal limit. Nonresidents can open TNStars too, since the plan has no residency requirement for owners or beneficiaries (TNStars Disclosure Brochure).
Four years at an in-state Tennessee public university runs about $101,600 on campus, so the average TNStars balance of about $16,700 covers roughly two-thirds of one year. Our Tennessee college costs and financial aid breakdown lists tuition by school, and our 529 savings benchmarks by age show what to aim for.
Tennessee 529 Plan Details
TNStars is administered and managed by the Tennessee State Treasurer and the Department of Treasury, and a state appropriation subsidizes its operating costs (TNStars Disclosure Brochure). As of June 30, 2026, TNStars held $574.1 million across 34,441 open accounts, and Tennessee ranked 47th among the states in 529 assets (The 529 Network). Our 529 plan and college savings statistics show how that compares nationally.
| Tennessee Plan (June 30, 2026) | Open Accounts | Assets | Average Balance |
|---|---|---|---|
| TNStars College Savings 529 Program | 34,441 | $574.1 million | $16,669 |
| All Tennessee 529 plans | 34,441 | $574.1 million | $16,669 |
TNStars College Savings 529 Program
TNStars is the only 529 plan Tennessee sponsors, and it's sold directly with no advisor version. Total annual cost runs 0.229% to 0.237% on the age-based portfolios and 0.220% to 0.860% on self-selected portfolios, with no account maintenance fee (TNStars Disclosure Brochure). On a $16,669 balance, the plan's average as of June 30, 2026, the age-based portfolios cost about $38 to $40 a year, which our 529 balance by age benchmarks can put in context.
The brochure warns that without the state subsidy, the program management fee would run about 0.38% a year, and there's no guarantee future appropriations continue. That's worth watching if you plan to hold TNStars for a decade or more, and our list of the best brokers to open a 529 plan shows alternatives.
| Program manager | Tennessee State Treasurer and Department of Treasury |
| Minimum contribution | $25 to open |
| Maximum account balance | $500,000 per beneficiary |
| All-in annual cost | 0.229%–0.237% (age-based portfolios); 0.220%–0.860% (self-selected portfolios) |
| Investment options | 10 age-based portfolios, 15 self-selected portfolios |
| Fund families | Vanguard, PRIMECAP Odyssey, DoubleLine, and Dodge & Cox |
| Who can open | Any U.S. citizen or resident alien 18 or older; no Tennessee residency requirement |
| Official source | tnstars.com or 855-386-7827 |
Other Tennessee College Savings Programs
Upromise. Upromise lets you earn money for your TNStars 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 TNStars account to your Upromise profile, which adds a way to save in a state that offers no tax deduction.
TIPS Match. The Tennessee Investments Preparing Scholars program matches $100 for every $25 a family deposits to TNStars during a qualifying period, up to $500 a year and $1,500 per child (Tennessee Department of Treasury). The applicant and child must live in Tennessee, the child must be 14 or younger, and 2026 income limits run from $54,100 for a two-person household to $139,300 for eight, with automatic eligibility for families on TANF, TennCare, or SNAP. Our Tennessee financial aid page lists the state's grants for later.
ABLE TN. Tennesseans with disabilities can save in ABLE TN, a 529A account administered by the Department of Treasury with fees of 0.20% to 0.84% (Tennessee Department of Treasury). The first $100,000 in an ABLE account doesn't count against SSI's $2,000 resource limit (Social Security Administration), and our 529 plan overview compares ABLE accounts 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, all without Tennessee tax. Our list of what to do with leftover 529 money covers each option, and Tennessee graduates in high-need fields should also check Tennessee student loan forgiveness programs.
Frequently Asked Questions
What Is The Tennessee 529 Plan Called?
Tennessee's 529 plan is the TNStars College Savings 529 Program, a direct-sold plan run by the Tennessee Department of Treasury. There's no advisor-sold version, and our 529 plans by state hub lists every state's plans.
Does Tennessee Offer A 529 Tax Deduction?
No. Tennessee has no income tax on wages, and its Hall tax on investment income ended with tax periods beginning in 2021, so there's nothing to deduct contributions from (Tennessee Department of Revenue). Residents can choose any state's plan without losing a tax break, and our state 529 tax deduction table shows the states that offer one.
Can I Use A Tennessee 529 Plan At An Out-Of-State College?
Yes. TNStars can be used at the school of your choice, and qualified withdrawals are federally tax-free with no Tennessee tax (TNStars). The list of qualified 529 plan expenses is the same no matter where the school is.
Can I Contribute To A Tennessee 529 Plan And Withdraw Right Away?
Not right away. There's no state deduction to lose, but TNStars holds each contribution for 21 calendar days before it's eligible for withdrawal (TNStars Disclosure Brochure). Match the withdrawal to an expense paid in the same calendar year, and see which states restrict this for tax reasons in our 529 plan churning breakdown.
What Happens If I Withdraw Tennessee 529 Money For Non-Qualified Expenses?
Tennessee doesn't tax the withdrawal, but the earnings portion faces federal income tax and the 10% federal penalty. Our explainer on the 529 plan penalty shows how to avoid it, including the exceptions for scholarships and disability.
Can I Use My Tennessee 529 Plan For Private K-12 School?
Yes. Starting in 2026, you can withdraw up to $20,000 per beneficiary per year for K-12 tuition and related expenses under federal law, and Tennessee has no income tax that would treat it differently. Our walkthrough on using a 529 plan for private school covers the paperwork.
Related Tennessee Resources
How We Sourced This Data
Plan details on this page come from the plan and the state: the TNStars Disclosure Brochure (April 22, 2026), the TNStars and Tennessee Department of Treasury websites, including the TIPS and ABLE TN pages, and The 529 Network 529 plan data as of June 30, 2026. Tax treatment comes from the Tennessee Department of Revenue's Hall income tax page. The college cost figure comes from our Tennessee financial aid page, which draws on institutional cost pages and NCES IPEDS data, and the ABLE resource rule comes from the Social Security Administration. Read more about how we fact-check and update content.
Page refreshed annually in September, after TNStars publishes its updated fee schedule, and reviewed in January for tax season. Last full refresh: September 24, 2026.
Editor: Clint Proctor Reviewed by: Colin Graves