Can 529 Funds Be Used for Furniture?
Navigate 529 plan rules for education savings. Discover what counts as a valid expense and avoid potential financial pitfalls.
A 529 plan is a tax-advantaged savings plan sponsored by states or educational institutions, designed to help individuals save for future education costs. These plans allow funds to grow with potential tax benefits.
Defining Qualified Education Expenses
Furniture is not considered a qualified education expense for 529 plan distributions. Qualified education expenses are specific costs directly related to enrollment or attendance at an eligible educational institution. Using 529 funds for items like furniture, which are personal living expenses not directly required for educational programs, does not align with Internal Revenue Service (IRS) guidelines for tax-free withdrawals.
Qualified expenses include tuition and fees necessary for enrollment or attendance at an eligible college, university, vocational school, or other postsecondary institution. This also extends to books, supplies, and equipment that are required for the student’s enrollment or courses. For instance, a required textbook or a computer necessary for coursework would qualify.
Room and board expenses can qualify if the student is enrolled at least half-time. The qualified amount is limited to the institution’s allowance for federal financial aid purposes, or the actual amount charged for on-campus housing. This means off-campus housing costs are capped at the school’s stated allowance.
Beyond higher education, 529 funds can cover K-12 tuition, up to $10,000 per student per year. As of July 4, 2025, additional K-12 expenses may also be considered qualified, including:
Curricular materials
Books
Online educational materials
Tutoring
Standardized test fees
Expenses for special needs services incurred in connection with enrollment or attendance for a special needs beneficiary at an eligible educational institution are also qualified.
529 plans can be used for expenses related to registered apprenticeship programs, which must be registered with the Department of Labor. Payments of principal and interest on qualified student loans are also permissible, up to a lifetime maximum of $10,000 per beneficiary. An additional $10,000 lifetime maximum can be used for each of the beneficiary’s siblings.
Consequences of Non-Qualified Withdrawals
When 529 funds are used for non-qualified expenses, such as furniture, the financial implications can be significant. The earnings portion of such a withdrawal becomes subject to federal income tax, meaning any investment growth will be taxed as ordinary income.
In addition to federal income tax, a 10% federal tax penalty applies to the earnings portion of the non-qualified withdrawal. For example, if $1,000 in earnings is withdrawn for a non-qualified expense, a $100 federal penalty applies.
State income tax and penalties may also be levied, depending on the state where the 529 plan was opened and the account owner’s state of residence. Some states may recapture previously granted state tax deductions or credits if funds are withdrawn for non-qualified uses. Only the earnings portion of the withdrawal is subject to these taxes and penalties, as contributions were made with after-tax dollars.