Can 529 Plans Be Used for K-12 Expenses?

A 529 plan serves as a tax-advantaged savings vehicle primarily designed to help families cover future higher education costs. These plans, sponsored by states or educational institutions, allow investments to grow without federal tax on earnings, provided the funds are used for qualified education expenses. The primary advantage lies in the tax-free growth and tax-free withdrawals for eligible educational costs.

Federal law expanded the permissible uses of 529 plans through the Tax Cuts and Jobs Act of 2017. This legislation allowed tax-free withdrawals from these plans to also cover tuition expenses for elementary or secondary public, private, or religious schools. This article will detail how 529 plans can be used for K-12 education, including which expenses qualify, the withdrawal process, and the tax implications at both the federal and state levels.

Understanding Eligible K-12 Expenses

“Qualified K-12 expenses” primarily refer to tuition costs for enrollment or attendance at an elementary or secondary public, private, or religious school under federal law. While the initial expansion focused solely on tuition, recent legislation, effective July 4, 2025, broadened this definition to include other K-12 educational expenses. These include:

• Curriculum and curricular materials
• Books
• Online educational materials
• Tuition for tutoring services
• Fees for nationally standardized achievement tests
• Advanced Placement examinations
• College admissions exams
• Dual enrollment fees for higher education courses
• Educational therapies for students with disabilities, provided by licensed practitioners

Certain expenses are generally not considered qualified K-12 expenses. These typically include room and board, general school supplies not explicitly required as curriculum materials, transportation costs, uniforms, and extracurricular activities unless they are inextricably linked and included as part of the tuition. Federal law currently imposes an annual limit of $10,000 per student for K-12 withdrawals. This annual limit will increase to $20,000 per student starting January 1, 2026. Account owners should maintain detailed school invoices and records as proof of eligible expenses for their tax records.

The Withdrawal Process

Obtaining funds from a 529 plan for K-12 expenses involves a series of procedural steps. Account owners typically initiate a withdrawal request through the plan administrator’s online portal, by phone, or by submitting a specific withdrawal form. The request will generally require information such as the 529 plan account number, the account owner’s and beneficiary’s names and Social Security numbers, the specific amount to be withdrawn, and the purpose of the withdrawal, specifying it is for K-12 tuition or other newly qualified K-12 expenses.

Account owners must also specify the payee for the disbursed funds. Options typically include direct payment to the educational institution or reimbursement to the account owner. Some plans may have restrictions on who can receive K-12 tuition withdrawals, with some only sending funds directly to the account owner. It is critical to ensure that withdrawals are made in the same tax year that the qualified expenses are paid to avoid potential complications with tax reporting. This ensures that the timing of the distribution aligns with the expenditure for tax purposes.

Federal and State Tax Considerations

Qualified K-12 withdrawals from a 529 plan are tax-free at the federal level. This means that neither the earnings nor the principal portion of the distribution is subject to federal income tax if used for eligible K-12 expenses. This tax-free treatment applies up to the annual federal limit of $10,000 per student.

While federal law allows for tax-free K-12 withdrawals, state tax laws vary significantly in their conformity. Some states fully align with federal treatment, offering the same tax-free benefits for K-12 withdrawals. Other states may not conform to the federal expansion, potentially treating K-12 withdrawals as non-qualified distributions for state tax purposes.

In these non-conforming states, the earnings portion of the withdrawal could be subject to state income tax, and any state tax deductions or credits previously claimed for contributions to the 529 plan might be subject to recapture. For instance, a state might consider K-12 tuition a non-qualified expense, leading to state income tax on the earnings and potential recapture of prior state tax benefits. Account owners receive IRS Form 1099-Q (Distributions From Qualified Education Programs) annually, which reports the total distributions, including the earnings and basis portions. This form is essential for demonstrating qualified use to the IRS. Given the diverse state tax implications, individuals should consult their specific state’s 529 plan rules and tax laws or a qualified tax advisor to understand the state-specific consequences of using 529 funds for K-12 education.