What Can a 529 Plan Be Used For?
A list of qualified education expenses and tax benefits.
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Let’s not beat around the bush: College is expensive. That’s why some people choose to invest their aftertax dollars in a 529 college savings plan, where funds can grow and be withdrawn tax-free.
Tuition is the most obvious use of 529 assets, but you can also use a 529 plan to pay for many other education expenses.
What Higher Education Expenses Can I Use a 529 Plan For?
You can use a 529 plan to pay for these qualified higher education expenses:
| Expense | When Can I Use a 529 to Pay for This? |
|---|---|
| Tuition and fees | This expense must be required for enrollment or attendance. |
| Books, supplies, and other school-related equipment | This expense must be required for enrollment or attendance. |
| Special services for students with special needs | The services must be provided by the school. |
| Room and board | The student must be enrolled at least half-time. |
| Computer, software, internet, and other computer-related expenses | This expense must be used primarily for education. (529 assets can’t be used to cover recreational activities, such as computer games that aren’t educational.) |
| Books, fees, and equipment for an apprenticeship program | The program must be registered and certified with the Secretary of Labor. |
| Student loans | This amount is limited to $10,000 for principal or interest payments on qualified student loans. |
Source: Internal Revenue Service.
And here are a few expenses you can’t use a 529 plan for:
- Transportation: Instead, save money by leaning into carpooling, using public transit or campus transportation, and relying on your own two feet.
- College application fees: Depending on where you apply, this can range anywhere from $30 to $90.
- Test and prep fees: The ACT and SAT official websites break down the current costs for testing, fees, and services.
- Semester dues or fees for campus clubs: This includes fraternities, sororities, sports, and other nonacademic clubs.
- Personal entertainment expenses: This includes everything from an off-campus gym membership to going to the movies or the bar. These costs go on your personal tab, not your 529.
Can I Use a 529 Plan to Pay for K-12 Education?
Short answer: It depends on where you live. In some states, you can use your 529 plan for K-12 education and get a corresponding income tax deduction.
Most states require an in-state 529 plan for you to be eligible for these tax deductions, but a few offer them regardless of the state in which your 529 plan is based.
| State | Type of 529 Plan | Deductible Contributions |
|---|---|---|
| Arizona | Any state’s 529 plan | Individual: $2,000; Married: $4,000 |
| Arkansas | Any state’s 529 plan | Arkansas 529 plan: up to $5,000 if Individual, $10,000 if Married; Non-Arkansas plans: up to $3,000 if Individual, $6,000 if Married; Rollover contributions: $7,500 if Individual, $15,000 if Married |
| Connecticut | Connecticut 529 plan | Individual: $5,000; Married: $10,000 |
| District of Columbia | DC 529 plan | Individual: $4,000; Married: $8,000 |
| Georgia | Georgia 529 plan | Individual: $2,000; Married: $4,000 |
| Idaho | Idaho 529 plan | Individual: $6,000; Married: $12,000 |
| Indiana | Indiana 529 plan | A 20% tax credit on up to $5,000 per year can be claimed. |
| Iowa | Iowa 529 plan | Individual: $3,319; Married: $6,638 |
| Kansas | Any state’s 529 plan | Individual: $3,000; Married: $6,000 |
| Maryland | Maryland 529 plan | Individual: $2,500; Married $5,000 with 10-year carryforward |
| Massachusetts | Massachusetts 529 plan | Individual: $1,000; Married: $2,000 |
| Mississippi | Mississippi 529 plan | Individual: $10,000; Married: $20,000 |
| Missouri | Any state’s 529 plan | Individual: $8,000; Married: $16,000 |
| North Dakota | North Dakota 529 plan | Individual: $5,000; Married: $10,000 |
| Ohio | Ohio 529 plan | Individual or Married: $4,000 |
| Oklahoma | Oklahoma 529 plan | Individual: $10,000; Married: $20,000 with five-year carryforward |
| Pennsylvania | Any state’s 529 plan | Individual or Married: the gift-tax exclusion amount |
| Rhode Island | Rhode Island 529 plan | Individual: $500; Married: $1,000 |
| South Carolina | South Carolina 529 plan | Any contributions are fully deductible. |
| Utah | Utah 529 plan | Individual: $1,960; Married: $3,920 per year can be claimed with a 5% tax credit |
| Virginia | Virginia 529 plan | Individual or Married: $4,000 with an unlimited carryforward |
| West Virginia | West Virginia 529 plan | Any contributions are fully deductible. |
| Wisconsin | Wisconsin 529 plan | Individual or Married: $3,200 with an unlimited carryforward |
A previous version of this article appeared Jan. 4, 2024.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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