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You can now withdraw up to $20,000 a year from a 529 plan for K-12 expenses, double the old $10,000 limit. The One Big Beautiful Bill Act raised the annual K-12 cap starting in 2026 and widened what counts as a qualifying expense, so 529 money can now cover more than just private school tuition. The law also lets you use a 529 for trade-school credentials and professional licenses. Here is what changed and the state catch you need to watch. Because tax rules vary by state, confirm the details with a tax professional.
Key Takeaways
- The annual K-12 withdrawal limit doubled from $10,000 to $20,000 per student starting in 2026.
- Qualifying K-12 expenses now include more than tuition: books, curriculum, tutoring, testing fees, and more.
- 529 funds can now pay for postsecondary credentialing programs and professional licenses, not just college.
- College expenses are unchanged: tuition, fees, room and board, books, and computers still qualify.
- Not every state conforms, so a withdrawal that is federally tax-free may still be taxed by your state.
What changed for 529 plans in 2026?
A 529 plan is a tax-advantaged account for education savings: your money grows tax-free and withdrawals are tax-free when used for qualifying education expenses. The One Big Beautiful Bill Act (OBBBA) expanded 529 plans in three ways: it doubled the annual K-12 withdrawal limit, broadened the list of qualifying K-12 expenses, and added postsecondary credentialing costs as a qualified use. For the full set of changes in the law, see our complete OBBBA tax changes guide.
How much can you withdraw for K-12?
Starting in 2026, you can withdraw up to $20,000 per student per year for K-12 expenses, up from the previous $10,000 limit. The cap is per beneficiary, so if you have two children with their own 529 accounts, each has a separate $20,000 annual limit. This is a federal limit on tax-free K-12 withdrawals; college withdrawals are not subject to this annual cap.
What K-12 expenses now qualify?
Before, only K-12 tuition counted. Now a wider set of expenses for elementary and secondary students qualifies for tax-free 529 withdrawals:
- Tuition at a public, private, or religious school
- Curriculum and curricular materials
- Books and online educational materials
- Tutoring outside the home by someone who is not a relative
- Standardized test fees, such as the SAT and AP exams
- Dual-enrollment fees for college courses taken in high school
- Educational therapies for students with disabilities
This makes a 529 useful for families whether or not they pay private school tuition, since tutoring, testing, and materials now count too.
Can you use a 529 for trade school and credentials?
Yes. The law added postsecondary credentialing expenses as a qualified use. You can now use 529 funds for recognized credential and licensing programs, such as welding, plumbing, cosmetology, and commercial driver’s license (CDL) training, as well as professional exams like the CPA and the bar. Eligible costs include tuition, testing fees, books, required equipment, and continuing education needed to earn or maintain the credential. This opens 529 plans to career paths that do not run through a traditional four-year college.
What about college expenses?
College use of a 529 did not change and remains the core benefit. Qualified higher-education expenses still include tuition and fees, room and board for students enrolled at least half-time, books and supplies, and computers and internet access used for school. You can also still use up to $10,000 over a lifetime per beneficiary to repay student loans.
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Does your state follow these rules?
This is the catch. The expanded rules apply to federal taxes, but states set their own 529 tax treatment, and not all of them conform. Some states do not recognize K-12 or the newly added expenses as qualified, which means a withdrawal that is federally tax-free could be taxed by your state, and you might owe back any state tax deduction you previously claimed on those contributions.
Before taking a K-12 or credentialing withdrawal, check your own state’s 529 rules or ask a tax professional. The federal benefit is settled; the state treatment is where people get tripped up.
It is also worth remembering that many states offer a state income tax deduction or credit for 529 contributions, which is a separate benefit from the tax-free withdrawals. If your state offers one, contributing before year end can lower your state taxable income, but only if your state recognizes the type of withdrawal you plan to make.
What if your child does not use all the money?
Leftover 529 money is no longer stuck. Under a separate rule that took effect in 2024, you can roll up to $35,000 over a lifetime from a 529 into the beneficiary’s Roth IRA, as long as the account has been open at least 15 years and you stay within the annual Roth contribution limits. That means money you saved for school but did not need can help jump-start the child’s retirement savings instead, tax-free. It is one reason a 529 is less risky than it used to be: unused funds have a productive exit besides a taxable withdrawal.
How does a 529 compare to a Trump Account?
The OBBBA also created Trump Accounts, a different kind of tax-advantaged account for children focused on general investing rather than education. A 529 is specifically for education and offers tax-free growth for qualified education costs, while a Trump Account is broader but has its own contribution limits and rules. Families saving for a specific goal often use both. See our Trump Account FAQ for how those work and how they differ from a 529.
FAQ
How much can I withdraw from a 529 for K-12 in 2026?
Up to $20,000 per student per year, double the previous $10,000 limit. The cap is per beneficiary, and it applies to federal tax-free withdrawals.
Can I use a 529 for tutoring or test fees?
Yes, starting with the 2026 expansion. K-12 tutoring by a non-relative, standardized test fees like the SAT and AP exams, books, and curriculum materials now qualify, not just tuition.
Can a 529 pay for trade school or a professional license?
Yes. The law added postsecondary credentialing programs and professional licensing costs, including tuition, testing fees, books, and required equipment.
Will my state tax a K-12 withdrawal?
It depends. Some states do not conform to the federal K-12 and expanded-expense rules, so a federally tax-free withdrawal could be taxable in your state. Check your state’s rules first.
Did college rules change?
No. Tuition, fees, room and board, books, and computers still qualify, and the $10,000 lifetime student loan repayment option remains.
Bottom line: Starting in 2026 you can withdraw up to $20,000 a year from a 529 for a wider range of K-12 costs, and 529 funds can now pay for trade-school credentials and professional licenses too. College rules are unchanged. The one thing to check before you withdraw is whether your state conforms, because state tax treatment varies.
This article is for educational and informational purposes only and is not tax or financial advice. 529 rules and state conformity change, and your situation is unique. We want you to feel confident, not overwhelmed, so confirm how these rules apply in your state with a qualified tax professional, or at irs.gov, before you withdraw.
