Quick answer

Yes — at the federal level you can use a 529 plan for K‑12 tuition, but there are important limits and state rules to watch. The Tax Cuts and Jobs Act of 2017 opened a path for families to use up to $10,000 per beneficiary per year in 529 funds for K‑12 school tuition. However, not all education costs qualify, and your state may treat those withdrawals differently for income tax or deductions.

How the federal rule works

  • Federal limit: Up to $10,000 per beneficiary, per year, can be withdrawn from a 529 plan tax‑free for K‑12 tuition (public, private, or religious elementary or secondary schools). This is a federal income‑tax rule created by the Tax Cuts and Jobs Act of 2017 (source: IRS overview of Qualified Tuition Programs/529 plans and Publication 970).
  • What counts: The $10,000 cap applies to tuition only. It does not extend to books, supplies, transportation, extracurriculars, or room and board for K‑12 students.
  • Taxation and reporting: Qualified withdrawals are not subject to federal income tax. Nonqualified withdrawals are reported on Form 1099‑Q; earnings portion of a nonqualified distribution is taxable and generally subject to a 10% additional tax unless an exception applies (e.g., scholarship, disability, or death) (see IRS Publication 970).

Sources: IRS — Qualified Tuition Programs (529 plans) (https://www.irs.gov/credits-deductions/qualified-tuition-program-529-plans); IRS Publication 970 (https://www.irs.gov/publications/p970).

What “qualified” expenses mean for K‑12

Federally qualified K‑12 expenses are narrow. For K‑12, 529 plan distributions are only tax‑free when used to pay tuition at an eligible elementary or secondary school, up to $10,000 per year per beneficiary. By contrast, college qualified expenses are broader and may include tuition, fees, required books, supplies, equipment, and certain room and board.

Tip from practice: I’ve seen families assume everything paid to a private school is eligible. In many cases only the posted tuition qualifies for the $10,000 K‑12 rule — things like activity fees, uniforms, and transportation typically do not.

State tax and recapture issues

States are not required to follow federal changes. Many states that historically offered a state income tax deduction or credit for 529 contributions “decoupled” from the federal K‑12 expansion. That means:

  • Your state may add back any 529 K‑12 distribution to taxable income if the state does not conform to the federal rule.
  • If you previously claimed a state deduction for contributions and later use funds for a nonconforming purpose (including K‑12 in some states), the state may recapture some or all of that deduction.

Because rules vary state‑by‑state, check your state’s 529 plan or tax authority before relying on K‑12 withdrawals. See our guide to comparing plans across states for fees and tax treatment: “Comparing 529 Plans Across States: Fees, Portability, and Tax Benefits” (https://finhelp.io/glossary/comparing-529-plans-across-states-fees-portability-and-tax-benefits/).

Financial aid and FAFSA implications

  • Ownership matters: If a 529 is owned by a parent (or dependent student) it is treated as an asset of the parent (or student) on the Free Application for Federal Student Aid (FAFSA), which may reduce need‑based aid eligibility. Distributions themselves are not treated as income on the FAFSA in the year they are taken, but the underlying assets can affect aid calculations.
  • Grandparent‑owned 529s: These were treated differently in past FAFSA rules and could reduce aid when distributions were made; FAFSA simplifications implemented in recent years changed some treatment — check the latest guidance at Federal Student Aid (https://studentaid.gov).

For more on aid tradeoffs and timing, see our article “Coordinating 529s and Financial Aid: Tax‑College Tradeoffs” (https://finhelp.io/glossary/coordinating-529s-and-financial-aid-tax%e2%80%91college-tradeoffs/).

Alternatives and when to choose them

If you need broader K‑12 flexibility (for books, supplies, or other school costs), consider alternatives:

  • Coverdell Education Savings Account (ESA): Can pay many K‑12 education expenses beyond tuition, but has lower contribution limits and income limits.
  • Custodial accounts (UGMA/UTMA): No tax‑free withdrawal for education, but funds can be used for any purpose benefiting the child. May impact financial aid differently.
  • Saving or paying out of taxable accounts: Simpler, no restrictions, but lacks tax‑free growth on qualifying withdrawals.

Compare options in our piece “Comparing 529, Custodial Accounts, and Trust Strategies for Families” (https://finhelp.io/glossary/comparing-529-custodial-accounts-and-trust-strategies-for-families/).

Common mistakes I see working with families

  • Treating all school charges as qualified. Only tuition (up to $10,000) qualifies for K‑12 under federal law.
  • Ignoring state tax rules. Families can unintentionally trigger state income tax or recapture deductions.
  • Poor timing relative to financial aid. Taking large withdrawals at the wrong time can change aid calculations.
  • Mixing up account ownership. Who owns the account affects taxes, aid, and control.

Practical withdrawal and recordkeeping steps

  1. Confirm tuition amount that qualifies. Ask the school for an itemized tuition bill so you don’t accidentally include ineligible fees.
  2. Check your state 529 plan rules and state tax treatment for K‑12 distributions. Contact your state tax department or your plan’s website.
  3. Time distributions carefully. If possible, plan withdrawals in the year tuition is due and keep records (receipts, invoices, bank statements).
  4. Track cumulative K‑12 withdrawals per beneficiary so you don’t exceed $10,000 in a given tax year.
  5. Keep Form 1099‑Q and any plan statements for tax preparation. If you take a nonqualified distribution, you’ll need to report the earnings portion on your return and may owe the 10% penalty (with exceptions).

Example scenario

A client saved in a parent‑owned 529 and paid private high school tuition with four annual $10,000 withdrawals. Because the plan was parent‑owned, distributions were tax‑free federally and did not generate tax on the earnings. However, their home state did not conform to the federal K‑12 change, so we tracked a state tax recapture that required adding the withdrawn amount back to their state income. Planning ahead allowed them to offset some of that state cost with other deductions and timing.

Decision checklist

  • Is the expense tuition (not fees or supplies)?
  • Will the withdrawal exceed $10,000 for the beneficiary in the calendar year?
  • Who owns the 529 and how will that affect financial aid?
  • Does your state tax department conform to the federal K‑12 rule?
  • Are there better alternatives (Coverdell, custodial) for your goals?

Related FinHelp resources

Sources and further reading

Professional disclaimer: This article is educational and not personalized tax or investment advice. Rules for 529 plans and state tax treatment change; consult a CPA or certified financial planner familiar with your state and circumstances before making withdrawals or changing beneficiaries.

Author’s note: In my practice advising families on education funding, the biggest wins come from aligning account ownership, timing distributions, and confirming state tax treatment before a major K‑12 withdrawal. Planning prevents surprises.