529 is a section of the US tax code referring to the establishment of tax preferential savings for college education. There are 529 plans in all US states. A 529 plan typically allows you to deduct contributions you make into a plan up to a certain amount per year from your taxable income. 529 plans typical impose certain restrictions on the types of educational expenses that the funds can eventually be used for. If the funds are used for educational expenses or other expenses that do not qualify then tax will be charged.