Until recently, 529 college-savings plans offered tax-free withdrawals only when the money was used for qualified college education expenses. But under the federal tax overhaul enacted at the end of 2017, parents can withdraw up to $10,000 tax-free from a 529 plan each year to pay for private-school tuition for kindergarten through 12th grade.
Before you start using your 529 plan to pay private-school tuition, check with your state’s plan. Although most states conform with federal law, a few, including Illinois, New York and Oregon, have different rules that could result in unexpected taxes and penalties. They typically charge state income tax on the earnings portion of the distribution and require families to return state tax deductions or credits received for contributions.
There are other reasons to think twice about using your 529 plan for precollege expenses. College savings plans work best when your investments have plenty of time to grow. Plus, tapping the account for precollege expenses could leave you with a shortfall for college. Families planning to use 529 funds for K–12 should consider opening a separate 529 account for that purpose. This allows you to track K–12 and college savings separately and pick investment portfolios that match your needs for each.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Retirement’s Most Rewarding Project: Writing the Story of Your Life -
I'm 57 with a great remote job, but my company wants me in the office full-time. I don't have the energy for a daily commute. Help!We asked career planning and human resources experts for advice on how to handle return-to-work orders.
-
10 Retirement Tax Plan Moves to Make Before December 31Retirement Taxes Proactively reviewing your health coverage, RMDs and IRAs can lower retirement taxes in 2025 and 2026. Here’s how.
-
Ask the Editor, September 12: Tax Questions on 529 Plan Rollovers to a Roth IRAAsk the Editor In this week's Ask the Editor Q&A, we answer four questions from readers on transferring 529 plan money to a Roth IRA.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Amazon Resale: Where Amazon Prime Returns Become Your Online BargainsFeature Amazon Resale products may have some imperfections, but that often leads to wildly discounted prices.
-
Ask the Editor: Reader Questions, April 25 — 529 plans
In our latest Ask the Editor round-up, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions related to 529 plans.
-
457 Plan Contribution Limits for 2026Retirement plans There are higher 457 plan contribution limits in 2026. That's good news for state and local government employees.
-
Best 529 Plans of 2025Check out the best 529 plans of 2025 and find the best plan for your child or grandchild’s college savings.
-
529 Plans Hit a New Milestone: Why They're So PopularRecently, 529s hit a new milestone with over half a trillion dollars being saved in plans across the country. Why are 529 plans so popular?
