What Can a 529 Plan
Actually Pay For?
A 529 is one of the most powerful tax-advantaged tools for education savings — but only if you spend it on the right things. Here's the complete breakdown of what qualifies and what doesn't.
See the full listā Qualified Expenses
Where Your 529 Dollars Work Tax-Free
These expenses qualify for federal tax-free withdrawals. Your state may also offer a deduction or credit for 529 contributions — ask your financial planner what applies to you.
- Tuition and enrollment fees
- Room and board — on-campus, or off-campus up to the school's published Cost of Attendance
- Required textbooks, supplies, and course materials
- Computers, software, and internet access required for enrollment
- Special needs equipment and services
Applies to accredited two-year, four-year, and graduate programs in the U.S. and some international schools.
- Tuition and required program fees
- Required books and course materials
- Tools and equipment required for the program
- Room and board if the school provides housing
The school must be eligible for federal student aid (Title IV) to qualify. Most accredited trade programs meet this standard.
- Tuition at private elementary and secondary schools
- Tuition at religious schools (K–12)
- Homeschool curriculum costs in some states
ā ļø Capped at $10,000 per year, per beneficiary. Some states do not recognize K–12 as qualified and may claw back a state tax deduction — check your state rules first.
- Program registration and certification fees
- Required books and training materials
- Required tools, uniforms, and protective equipment
The program must be registered with the U.S. Department of Labor. Trades like electrical, plumbing, HVAC, and welding commonly qualify.
- Principal and interest payments on the beneficiary's student loans
- Payments toward a sibling's student loans
ā ļø Lifetime limit of $10,000 per individual (beneficiary and each sibling). Added by the original SECURE Act (2019). Note: you can't also claim the student loan interest deduction on the same funds.
- Tax-free rollovers from a 529 into an ABLE account
- Can benefit the same family member or a qualifying sibling or first cousin
Subject to ABLE annual contribution limits. The beneficiary must have been diagnosed with a qualifying disability before age 26. Added by the Tax Cuts and Jobs Act (2017).
Roll Unused 529 Funds into a Roth IRA
If your child doesn't use all of their 529 savings, the SECURE 2.0 Act (effective 2024) lets you roll up to $35,000 over a lifetime into the beneficiary's Roth IRA — completely tax- and penalty-free. The 529 must have been open for at least 15 years, annual rollovers are capped at the Roth IRA contribution limit for that year, and the funds must have been in the 529 for at least 5 years. This is one of the most significant changes to 529 rules in decades and eliminates a major concern about over-saving.
ā Non-Qualified Expenses
What a 529 Won't Cover Tax-Free
Using 529 funds on these items triggers ordinary income tax plus a 10% federal penalty — applied to the earnings portion of your withdrawal, not your original contributions.
The Non-Qualified Withdrawal Penalty
Spending 529 funds on a non-qualified expense means you'll owe ordinary income tax plus a 10% federal penalty — but only on the earnings portion of the withdrawal, not on your original contributions (which went in after tax). Exceptions exist: the penalty is waived if the beneficiary receives a tax-free scholarship, attends a U.S. military academy, becomes disabled, or passes away. In those cases, you still owe the income tax on earnings, but not the 10% penalty.
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Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer's official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investment in any state's 529 Plan.