The contributions to the 529 plan aren't tax deductible for federal taxes, but may be tax deductible for state taxes depending on the state. However, the growth of the money is tax free. So if contributions have doubled in ten years or so, from a contributed amount of $10,000 for example, which has grown to be $25,000 in the intervening years, then the growth of $15,000 is tax free. There is a caveat to this tax exemption rule; the money must be spent on qualifying education expenses. If the money isn't spent on qualifying education expenses, then there is a 10% penalty assessed and taxes on the amount that the money has grown over the years. However, there is another scenario which can affect the tax situation: if your child gets a full scholarship, then the 10% penalty is waived (but the tax remains) if an amount up to the scholarship amount is withdrawn.