Texas 529 Plan Rules And College Savings Options
Texas sponsors two 529 savings plans and a prepaid tuition plan, and for most families the direct-sold Texas College Savings Plan or the Texas Tuition Promise Fund is the place to start. Texas has no income tax, so no Texas plan offers a deduction, and the direct plan's 0.31% program and state fees keep it near the bottom of our rankings on cost. Families set on a Texas public university should price the prepaid plan, which locks in today's tuition, while families who want the cheapest investment account can shop any state's plan. Our 529 plans by state hub lists the alternatives.
Texas 529 Plans At A Glance
| Plan | Type | Annual Cost | Who It's For | Status |
|---|---|---|---|---|
| Texas College Savings Plan | Direct-sold savings plan | 0.36%–0.40% on age-based portfolios; 0.31%–0.61% on all 21 portfolios | Families who open and manage the account themselves | Open |
| LoneStar 529 Plan | Advisor-sold savings plan | 0.74%–1.01% (Class A) or 0.49%–0.76% (RIA) on target enrollment portfolios, plus up to a 2.75% sales charge on Class A | Families who want a financial advisor to pick investments | Open |
| Texas Tuition Promise Fund | Prepaid tuition plan | Unit prices for 2026-27 run $32.58 to $165.12 | Families who expect to attend a Texas public college | Open |
| Texas Guaranteed Tuition Plan | Prepaid tuition plan | No new contracts | Existing contract holders only | Closed |
Texas 529 Tax Rules
Texas doesn't impose an income tax on individuals, so there's no deduction for 529 contributions and no state tax on withdrawals of any kind (Texas College Savings Plan). That holds for all four Texas programs and for any other state's plan a Texan owns. Our state-by-state 529 tax deduction table shows what residents of income-tax states get instead.
Federal rules still apply to every Texas 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 | Texas Tax Treatment |
|---|---|
| Contribution to a Texas 529 plan | No deduction; Texas 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; the Texas College Savings Plan can hold new contributions up to 10 business days before withdrawal |
| Rollover from a Texas plan to another state's plan | No state tax or recapture |
| Rollover from another state's plan into a Texas plan | No state tax |
| 529-to-Roth IRA rollover | No state tax; federal rules apply |
Churning has no tax angle in Texas because there's no state deduction to claim. The only timing rule is operational: after a contribution by check, automatic plan, or electronic transfer, the board and plan manager can block withdrawal of that money for up to 10 business days (Texas College Savings Plan). Plan around that window 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 Texas 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 (Texas College Savings Plan), which our 529-to-Roth IRA rollover rules cover in detail.
With no income tax, Texas has nothing to conform or decouple, and the plan's December 2025 supplement already reflects the federal changes: the $20,000 K-12 limit starting January 1, 2026, credential expenses, and ongoing 529-to-ABLE rollovers (Texas College Savings Plan). Our breakdown of the 2026 529 plan expansion covers what changed federally.
How Texas's 529 Plan Ranks
Texas ranks 47th of the 50 state plans in our best 529 plans rankings, which include Washington, D.C., with a 54.9% 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. Texas's score is fee-driven because it has no tax break, and the direct plan's 0.31% in program and state fees is higher than most plans in the table.
| State | Fees (Basis Points) | State Tax Break | Net ROI |
|---|---|---|---|
| Indiana (#1 overall) | 12.5 | 20% | 87.8% |
| New Mexico | 10 | 5.9% | 67.0% |
| Oklahoma | 10 | 4.5% | 64.8% |
| Louisiana | 2 | 3% | 63.8% |
| Arkansas | 48 | 3.7% | 57.8% |
| Texas (#47) | 31 | 0% | 54.9% |
The in-state savings plan has no home-state tax edge, so a Texas family choosing an investment account should compare the Texas College Savings Plan's all-in cost with other states' direct plans. Texans lose nothing on their state return by picking a lower-fee plan elsewhere, and our full rankings table lists all 50 state plans with their fees. The Texas Tuition Promise Fund is a different product, so weigh it on tuition inflation rather than fees.
The levers here are different from income-tax states. Texas can't add a tax break without an income tax, so fees are the only way to raise the savings plan's value, and the 0.25% program management fee is most of what Texas families pay. If that matters to you, share these numbers with your state legislators and the Texas Prepaid Higher Education Tuition Board, and use our 529 plan tax deductions by state table to see how other states reward savers.
Should Texas Residents Use The Texas College Savings Plan?
It depends on what you're buying. For a flexible investment account, the Texas College Savings Plan's 0.36% to 0.40% age-based cost is fair, but Texas residents give up nothing by choosing a cheaper plan in another state (Texas College Savings Plan). Our explainer on where to open a 529 plan shows how to compare.
For a child likely to attend a Texas public college, the Texas Tuition Promise Fund lets you buy units of today's tuition and required fees, with one unit generally covering 1% of a year (Texas Tuition Promise Fund). Private or out-of-state schools get only a transfer value, capped at what the units would cover at a Texas public school or the purchase price plus or minus earnings, and our prepaid tuition vs. 529 plan comparison explains the tradeoff.
Four years at an in-state Texas public university runs about $104,400 on campus, so the average Texas College Savings Plan balance of about $23,600 covers a little less than one year. Our Texas college costs and financial aid breakdown lists tuition by school, and our 529 savings benchmarks by age show what to aim for.
Texas 529 Plan Details
All four Texas programs are overseen by the Texas Prepaid Higher Education Tuition Board, part of the Texas Comptroller of Public Accounts, and Orion Advisor Solutions manages the savings plans and the Tuition Promise Fund (Texas College Savings Plan; Texas Tuition Promise Fund). As of June 30, 2026, Texas's four programs held $2.93 billion across 95,499 open accounts, ranking 33rd among the states in 529 assets (The 529 Network). Our 529 plan and college savings statistics show how that compares nationally.
| Texas Plan (June 30, 2026) | Open Accounts | Assets | Average Balance |
|---|---|---|---|
| Texas College Savings Plan | 47,780 | $1.13 billion | $23,582 |
| LoneStar 529 Plan | 8,835 | $259.8 million | $29,404 |
| Texas Tuition Promise Fund | 29,778 | $1.43 billion | $47,925 |
| Texas Guaranteed Tuition Plan (closed) | 9,106 | $116.8 million | $12,827 |
| All Texas 529 plans | 95,499 | $2.93 billion | $30,686 |
Texas College Savings Plan
This is the plan to open if you're managing the account yourself. Every portfolio pays a 0.25% program management fee and a 0.06% state administrative fee on top of underlying fund expenses of 0.00% to 0.30%, for a total of 0.31% to 0.61% as of September 30, 2025 (Texas College Savings Plan). On a $23,582 balance, the plan's average as of June 30, 2026, the age-based portfolios cost about $85 to $94 a year, which our 529 balance by age benchmarks can put in context.
| Program manager | Orion Advisor Solutions, Inc. |
| Minimum contribution | $25 per portfolio, or $15 through an automatic investment plan or payroll deduction |
| Maximum account balance | $500,000 per beneficiary across all Texas 529 plans |
| All-in annual cost | 0.36%–0.40% (age-based portfolios); 0.37%–0.39% (risk-based portfolios); 0.31%–0.61% (individual asset class portfolios) |
| Investment options | 10 age-based portfolios, 3 risk-based portfolios, 8 individual asset class portfolios |
| Fund families | Vanguard, Dimensional, Federated Hermes, Eaton Vance, and Baird, plus a New York Life guaranteed interest account |
| Who can open | Any U.S. citizen or permanent resident 18 or older; no Texas residency requirement |
| Official source | texascollegesavings.com or 800-445-4723 |
LoneStar 529 Plan
LoneStar 529 uses the same tax rules but costs more because it pays the financial advisor who sells it. Every portfolio carries a 0.28% program management fee and a 0.06% state fee, and Class A units add a 0.25% distribution fee and up to a 2.75% sales charge (LoneStar 529). Families who want professional help should compare that against a fee-only planner, and our list of the best brokers to open a 529 plan shows the self-directed options.
| Program manager | Orion Advisor Solutions, Inc.; distributed by Northern Lights Distributors |
| Program fees | 0.28% program management fee and 0.06% state administrative fee, plus underlying fund expenses of 0.00%–1.14% |
| Sales charges | Class A carries up to a 2.75% sales charge and a 0.25% distribution fee; RIA units carry no distribution fee |
| All-in annual cost | 0.74%–1.01% (Class A) and 0.49%–0.76% (RIA) on target enrollment portfolios, as of June 30, 2026 |
| Investment options | 10 target enrollment year portfolios, plus 23 risk-based and individual asset class portfolios |
| Maximum account balance | $500,000 per beneficiary across all Texas 529 plans |
| Official source | lonestar529.com or 800-445-4723 |
Texas Tuition Promise Fund
The Texas Tuition Promise Fund sells units of tuition and schoolwide required fees at Texas public colleges, excluding medical and dental schools (Texas Tuition Promise Fund). For 2026-27, a Type I unit costs $165.12, a Type II unit $115.92, and a Type III unit $32.58, and the $25 application fee is waived for online enrollments in September and October 2026 (Texas Tuition Promise Fund). The plan isn't constitutionally guaranteed by the state, which our prepaid tuition vs. 529 plan comparison weighs against the savings plans.
| Administered by | Texas Prepaid Higher Education Tuition Board; Orion Advisor Solutions is plan manager |
| Covers | Type I units track the most expensive Texas public university, Type II the weighted average at four-year Texas publics, and Type III the weighted average at two-year Texas public colleges |
| Status | Open; enrollment runs September 1 through February 28, and children under age 1 can enroll through July 31 |
| Official source | texastuitionpromisefund.com or 800-445-4723 |
Texas Guaranteed Tuition Plan
The Texas Guaranteed Tuition Plan, the state's original prepaid plan, closed to new enrollment in 2003 (Texas Tuition Promise Fund). The 529 Network data still shows 9,106 open accounts as of June 30, 2026 (The 529 Network), and our 529 plan overview covers how prepaid contracts differ from savings accounts.
| Administered by | Texas Prepaid Higher Education Tuition Board |
| Covers | Benefits under existing contracts only |
| Status | Closed to new enrollment since 2003 |
| Official source | Texas Prepaid Higher Education Tuition Board, 800-445-4723 |
Other Texas College Savings Programs
Upromise. Upromise lets you earn money for your Texas College Savings Plan 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 Texas 529 account to your Upromise profile, which adds a way to save in a state that offers no tax deduction.
Texas ABLE. Texas residents whose qualifying disability began before age 46 can save in Texas ABLE, a 529A account run by the Texas Prepaid Higher Education Tuition Board with Orion as program manager (Texas ABLE). 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 Texas tax. Our list of what to do with leftover 529 money covers each option, and Texas graduates in teaching, health care, or law should also check Texas student loan forgiveness programs.
Frequently Asked Questions
What Is The Texas 529 Plan Called?
Texas has two 529 savings plans, the direct-sold Texas College Savings Plan and the advisor-sold LoneStar 529 Plan, plus the Texas Tuition Promise Fund prepaid plan. The older Texas Guaranteed Tuition Plan is closed, and our 529 plans by state hub lists every state's plans.
Does Texas Offer A 529 Tax Deduction?
No. Texas doesn't impose an income tax on individuals, so there's nothing to deduct contributions from (Texas College Savings Plan). Texans 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 Texas 529 Plan At An Out-Of-State College?
Yes, with a difference between plan types. Texas College Savings Plan and LoneStar 529 withdrawals are federally tax-free at any eligible school, while Tuition Promise Fund units used at private or out-of-state colleges pay only a transfer value (Texas Tuition Promise Fund). The list of qualified 529 plan expenses is the same no matter where the school is.
Can I Contribute To A Texas 529 Plan And Withdraw Right Away?
Mostly yes. There's no state deduction to lose, but the Texas College Savings Plan can block withdrawal of a new contribution for up to 10 business days (Texas College Savings Plan). 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 Texas 529 Money For Non-Qualified Expenses?
Texas 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 Texas 529 Plan For Private K-12 School?
Yes, from the savings plans. Starting in 2026, you can withdraw up to $20,000 per beneficiary per year for K-12 tuition and related expenses, and the Texas College Savings Plan has updated its plan documents for the change (Texas College Savings Plan). Our walkthrough on using a 529 plan for private school covers the paperwork.
Related Texas Resources
How We Sourced This Data
Plan details on this page come from the plans: the Texas College Savings Plan Plan Description (December 13, 2021, as supplemented through December 2025), its FAQ and allocation worksheet (fees as of September 30, 2025), the LoneStar 529 allocation worksheet (fees as of June 30, 2026), the Texas Tuition Promise Fund website, FAQ, and 2026-27 pricing schedule, Texas ABLE, and The 529 Network 529 plan data as of June 30, 2026. Tax treatment comes from the Texas College Savings Plan Plan Description. The college cost figure comes from our Texas 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 the Texas College Savings Plan publishes its updated fee schedule, and reviewed in January for tax season. Last full refresh: September 24, 2026.
Editor: Clint Proctor Reviewed by: Ashley Barnett