Tax year 2026  ·  Reviewed October 7, 2026  ·  By Nazim Lokhandwala

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Printable checklist for your desk

Print this checklist and use it to plan which expenses the 529 pays and which the credits cover.

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The short version. A 529 plan lets savings grow tax-free for education. Withdrawals for qualified expenses are tax-free. Money used for anything else has its earnings taxed plus a 10% additional tax, though newer rules add options for leftover funds.

What counts as a qualified expense

  • College tuition, fees, books, supplies, and required equipment
  • Room and board, if the student is enrolled at least half-time
  • Computers, software, and internet access used by the student
  • Kindergarten through 12th grade expenses, up to $20,000 per student per year starting in 2026 (it was $10,000 through 2025). This now includes tuition, curriculum, books, tutoring, and test fees.
  • Apprenticeship program costs and certain credentialing expenses
  • Student loan repayment, up to $10,000 for life for the beneficiary and for each sibling

[1, 2]

If you take money out for something else

The earnings part of the withdrawal is taxed as income, plus a 10% additional tax on it. Exceptions include the student's death or disability, a tax-free scholarship, attending a U.S. military academy, and amounts used to claim the American Opportunity or Lifetime Learning credit. The plan reports the split on Form 1099-Q. [1, 3, 4]

Don't double-count with tax credits

The American Opportunity Tax Credit is worth up to $2,500 per student, and 40% of it can be refundable. The same expenses cannot be used for both the credit and a tax-free 529 withdrawal. Plan which dollars pay for what. [5]

The 529-to-Roth transfer

Leftover 529 money can be moved to a Roth IRA for the beneficiary, with limits: [1, 6]

  • The 529 account must have been open at least 15 years.
  • The transfer must go directly from the plan to the Roth IRA.
  • Each year's transfer is limited to the annual IRA limit ($7,500 for 2026), reduced by other IRA contributions that year.
  • The total lifetime limit is $35,000.
  • Contributions and earnings from the last five years cannot be transferred.

Gifts and the five-year election

Contributions to a 529 are completed gifts. The 2026 annual gift exclusion is $19,000 per recipient. A special election lets a donor spread a larger contribution over five years, up to five times the annual exclusion at once, by filing Form 709. For 2026 that is $95,000 per donor ($190,000 for a couple who split gifts). [7, 8]

Other points

  • 529 contributions are not deductible on your federal return. Check your state's rules.
  • The SEC does not regulate 529 plans, so compare fees and investment options between plans.
  • "Trump accounts" are a different account created by the 2025 law, not a 529. [9]

Questions worth asking

  • Which of my likely education expenses are qualified, now that K-12 and credentials count?
  • How will I coordinate the American Opportunity credit with 529 withdrawals?
  • If my child does not use all of it, would a beneficiary change or the Roth transfer fit?
  • What are the fees and investment options in my plan, and does my state give a deduction?

Plan a conversation

Frequently asked questions

Are 529 withdrawals taxable?

Withdrawals for qualified expenses are tax-free. Otherwise the earnings are taxed plus a 10% additional tax, with some exceptions.

Can a 529 pay for K-12?

Yes, up to $20,000 per student per year starting in 2026 (it was $10,000 through 2025).

Can a 529 pay student loans?

Yes, up to $10,000 for life for the beneficiary and for each sibling.

General education, not individualized investment, tax, or legal advice. Discuss tax decisions with your tax professional, and recheck annual limits before using this page for another tax year.

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