529 Plan Qualified Expenses: What You Can and Can't Pay For

529 plan qualified expenses are the education costs you can pay from a 529 account without owing federal income tax on the investment earnings. The main 529 plan qualified expenses are college tuition and fees, required books and supplies, computers and internet access, room and board for students enrolled at least half-time, K-12 costs up to $20,000 a year, registered apprenticeships, recognized credential programs and up to $10,000 of student loan repayments.

Getting the list right matters because a withdrawal that doesn't match a qualified expense can cost you income tax plus a 10% additional tax on the earnings. This guide covers what counts as of 2026, including the K-12 and credential changes that took effect in July 2025, and what doesn't. It's education, not tax advice. If you still need the basics of how the account itself grows and how to open one, start with how a 529 plan works.

What are 529 plan qualified expenses?

They fall into four groups: college, K-12, career training, and student loans. College costs have no annual dollar cap; the other groups do.

The IRS describes qualified higher education expenses as costs "required for the enrollment or attendance" of the beneficiary at an eligible college, university, vocational school or other postsecondary institution. An "eligible" school is generally one that can take part in federal student aid programs, which includes many trade schools and some schools abroad.

A 529 is one tool inside a wider plan. If you're still sorting out where education savings fit next to retirement and an emergency fund, our beginner's guide to how to start investing walks through that order of priorities.

What college costs can you pay with a 529?

Most of what a school bills you counts, plus a few costs the school doesn't bill. Here's the breakdown.

Tuition, fees, books and supplies

Tuition and mandatory fees count. Books, supplies and equipment count when the course or school requires them. A recommended but optional calculator or a nicer backpack does not.

Room and board

Housing and food qualify only if the student is enrolled at least half-time. For students living off campus, the qualified amount is generally capped at the room and board allowance in the school's official cost of attendance. Rent above that allowance is a non-qualified expense even though it's a real cost.

Example (hypothetical): the school's cost of attendance lists $12,000 a year for off-campus housing and food. The student's apartment and groceries cost $14,000. Only $12,000 of 529 withdrawals would be qualified; the extra $2,000 should come from another account.

Computers, software and internet

A laptop, required software and internet access count when used primarily by the beneficiary during the years they're enrolled. Gaming consoles and software that isn't educational don't.

Special needs services

Expenses for a special needs beneficiary that are needed for enrollment or attendance also count.

Can you use a 529 for K-12 private school?

Yes, up to $20,000 per year per beneficiary from 2026, and the list of K-12 costs is now wider than tuition. In 2025 and earlier years, the annual K-12 limit was $10,000.

The One Big Beautiful Bill Act, signed on July 4, 2025, expanded K-12 qualified expenses for distributions made after that date. Beyond tuition at public, private or religious schools, the IRS and plan sponsors now list:

• Curriculum and curricular materials, books, other instructional materials and online educational materials.
• Tutoring or educational classes outside the home, provided by a tutor who isn't related to the student and meets the qualification rules.
• Test fees for nationally standardized achievement tests, Advanced Placement exams and college admission exams.
• Dual enrollment fees for college courses taken while in high school.
• Educational therapies for students with disabilities.

Two cautions:

1. The $20,000 cap is per beneficiary, not per account. Grandparents and parents with separate 529s for the same child share one limit.
2. Your state may not follow the federal rules. FINRA warns that K-12 rules "vary by state and/or plan", and some states don't treat pre-college withdrawals as qualified, so state income tax, and possibly a clawback of past state deductions, can apply. Check your plan's disclosure document or your state's tax agency before you pay a school.

There's also an investing trade-off: money spent on K-12 has fewer years to grow before college.

Do apprenticeships, certifications and student loans count?

Yes. A 529 can pay for registered apprenticeships, recognized credential programs and a limited amount of student loan repayment.

• Apprenticeships: fees, books, supplies and equipment required for an apprenticeship program registered and certified with the US Department of Labor.
• Postsecondary credentials: since July 2025, tuition, fees, books, supplies and equipment for recognized credential programs, plus certain testing and continuing education costs. Chase's summary of the law says eligible programs must be recognized under the Workforce Innovation and Opportunity Act or listed in the federal WEAMS database, and gives examples such as CDL training, HVAC certification and CPA exam preparation. Confirm a specific program with your plan before you pay.
• Student loans: up to $10,000 over the beneficiary's lifetime. Each sibling of the beneficiary has a separate $10,000 limit, so one account can help a brother or sister too. Any interest paid with 529 money can't also be deducted as student loan interest.

What can't you pay for with a 529?

Anything that isn't required for enrollment or attendance, even if it's part of student life. These are the costs families most often get wrong:

If a cost is unclear, ask two questions: does the school require it, and is it on the official cost of attendance? If the answer to both is no, assume it's not qualified until your plan or a tax professional says otherwise.

What if only part of a withdrawal is qualified?

Only the part that matches a qualified expense is tax-free; the earnings share of the rest is taxed and usually hit with a 10% additional federal tax. This happens more often than outright misuse, for example when rent runs above the school's allowance or a withdrawal covers a car payment along with tuition.

Example (hypothetical): you withdraw $10,000 and can document $8,000 of qualified costs. The other $2,000 is non-qualified, and if $400 of it is earnings, that $400 is added to taxable income plus a $40 additional tax. Your state may add its own tax or recapture deductions you claimed earlier.

The 10% additional tax doesn't apply in some cases, including withdrawals up to the amount of a tax-free scholarship, or after the beneficiary's death or disability. For the full cost of using a 529 for non-education goals, and what to do with leftover money, see are 529 plans a bad idea; the leftover options, including the Roth IRA rollover added by SECURE 2.0, are explained in how a 529 plan works.

How do you withdraw from a 529 without a tax surprise?

Match each withdrawal to a qualified expense paid in the same calendar year, and keep the paperwork. The plan reports withdrawals to the IRS on Form 1099-Q, and it's up to you to show they were qualified.

1. Pay the bill first or at the same time. A withdrawal in December for a January tuition bill can fall in a different tax year from the expense.
2. Choose where the money goes. Plans can usually pay the school directly, the beneficiary or the account owner. Under the Form 1099-Q instructions, payments to the school or to the beneficiary are reported in the beneficiary's name; payments to the owner are reported in the owner's name. That matters if any part turns out to be taxable.
3. Don't double-dip with tax credits. You can't use the same dollars of tuition for a tax-free 529 withdrawal and for the American opportunity or lifetime learning credit. Many families pay part of tuition from other money to claim the credit, then use the 529 for the rest.
4. Keep records. Save tuition statements, housing contracts, receipts for books and computers, and the school's cost of attendance figures for at least as long as the IRS can question that tax year.
5. Check your state before K-12 or Roth moves. Federal and state rules are not always the same.

Outside the US, there's no 529 equivalent with these rules. Canadians use a Registered Education Savings Plan (RESP), and families in the UK and Australia generally use their own accounts, such as a Junior ISA in the UK. For a side-by-side look at the US options for a child, including custodial accounts, see the best ways to save money for your kids.

Investments inside a 529 can lose value, especially in the years right before you need the money, and returns are not guaranteed.

Next steps

• Pull your 529 plan's program description and look up your state's treatment of K-12, credential and Roth rollover withdrawals.
• Ask the school's financial aid office for the official cost of attendance before you plan room and board withdrawals.
• See where education savings fit with the rest of your money in our investing for beginners guide.
• If you're holding old savings bonds for school, read how to cash in savings bonds, including the education tax exclusion.
• And if you'd like to raise how much you can save each month, explore our guide to making money online, keeping in mind that results depend on effort and time.