K-12 529 withdrawals in 2026: $20,000 per child, and what your state does with it
The federal cap doubled on January 1, 2026. Several states did not follow, and their rule decides whether a K-12 withdrawal costs you money.
Tax-free from the 529 this year (federal)
$20,000
$6,000 above the $20,000 cap per child would be a taxable withdrawal.
| Federal cap per child, 2026 | $20,000 |
| Above the cap | $6,000 |
| Federal tax and 10 % on that part | $576 |
| Illinois treatment | Not qualified: add-back or tax |
Illinois: Bright Start Plan Description Supplement No. 2 (July 1, 2026): K-12 Expenses are qualified for federal but not Illinois tax purposes; such withdrawals are Nonqualified Withdrawals for Illinois and prior deductions are added back.
Worked out by Radif Partners · How we calculate · federal rules from Public Law 119-21 and IRS Publication 970, state rules from each state · not tax advice
From January 1, 2026, a 529 account can pay up to $20,000 a year of K-12 costs for each child free of federal tax, twice the $10,000 that applied from 2018 to 2025. The cap is per beneficiary and counts every 529 the child has together, not per account. Public Law 119-21, signed on July 4, 2025, also widened what counts: tuition at a public, private or religious school, plus curriculum, books, online materials, tutoring by a qualified tutor who is not a relative, standardized and AP test fees, college admission exams, dual enrollment and educational therapies for students with disabilities. Above the cap, the earnings part of the excess is taxed and carries the 10 % additional tax. Federal law is only half of the answer: 10 of the states with an income tax still treat K-12 withdrawals as non-qualified on their own return, and some add back the deductions you took when you put the money in. The calculator below shows both sides for your state.
What changed on January 1, 2026
Two parts of the 2025 law touch K-12 spending, and they did not start on the same day. The list of expenses was widened for distributions made after July 4, 2025, so a family that paid a tutor or an AP exam fee from a 529 in the fall of 2025 was already inside the new rules. The dollar cap moved from $10,000 to $20,000 only for tax years beginning after December 31, 2025. A family that took $15,000 for tuition in November 2025 had $5,000 of it outside the cap; the same withdrawal in January 2026 is fully covered.
The cap counts cash distributions from all 529 accounts of one beneficiary during the year. Grandparents and parents who each own an account for the same child share a single $20,000. Two siblings, on the other hand, each have their own.
| Expense paid for a K-12 student | Counts under the 529 rules |
|---|---|
| Tuition | Yes, inside the yearly cap |
| Curriculum and curricular materials | Yes, inside the yearly cap |
| Books or other instructional materials | Yes, inside the yearly cap |
| Online educational materials | Yes, inside the yearly cap |
| Tutoring or classes outside the home by a licensed teacher, a former teacher at an eligible institution or a subject matter expert, not related to the student | Yes, inside the yearly cap |
| Fees for standardized achievement tests, AP exams and college admission exams | Yes, inside the yearly cap |
| Fees for dual enrollment in a college | Yes, inside the yearly cap |
| Educational therapies for students with disabilities by a licensed or accredited provider | Yes, inside the yearly cap |
| Room and board, uniforms, school transport | No: those are Coverdell expenses, not 529 ones |
Room and board, uniforms and transport stay off the list. They are qualified for a Coverdell education savings account, which has its own rules (Coverdell against a 529), but a 529 that pays them makes a taxable withdrawal on the earnings part.
Above $20,000: only the earnings are taxed
A withdrawal is part money you put in and part growth. When K-12 spending passes the cap, the federal tax falls on the growth share of the excess alone, at your ordinary rate, plus the 10 % additional tax. Your plan's Form 1099-Q gives that share each year: box 2 divided by box 1.
Take a married couple in Illinois with $180,000 of taxable income and a seventh grader whose school costs $26,000 a year with tutoring. If the whole bill comes out of the 529 and 35 % of the account is earnings, $6,000 sits above the cap. At a 22 % federal rate, the tax and the additional 10 % on that slice come to $672. Paying the last $6,000 from a checking account avoids it.
Your own K-12 bill against the cap
Tax-free from the 529 this year (federal)
$20,000
| Federal cap per child, 2026 | $20,000 |
| Above the cap | $6,000 |
| Federal tax and 10 % on that part | $576 |
| Illinois treatment | Not qualified: add-back or tax |
The state half of the answer
A state income tax starts from federal income, then adds its own adjustments. When Congress first opened 529 accounts to K-12 tuition in 2018, each state chose whether to follow. The same choice came back with the 2025 law, and the answer is not always the same for the new expenses as for tuition.
States that treat K-12 withdrawals as qualified on their own return, as read on their revenue department or plan site: Alabama, Arizona, Connecticut, Delaware, District of Columbia, Georgia, Idaho, Kansas, Kentucky, Maine, Maryland, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Utah, Virginia, West Virginia, Wisconsin. In these states the $20,000 federal cap is the only one that matters, unless the state text sets a lower figure.
States that do not: California, Colorado, Hawaii, Illinois, Michigan, Minnesota, Nebraska, New York, Oregon, Vermont. A K-12 withdrawal is a non-qualified one for state purposes. Where the state gave you a deduction on the way in, it usually takes it back in the year of the withdrawal.
States with a partial answer or no clear text at the date we read them: Arkansas, Indiana, Iowa, Louisiana, Massachusetts. The state page lists what was found and when.
Back to the Illinois couple. The Bright Start plan description says K-12 expenses are qualified for federal purposes but not for Illinois, and that earlier deductions come back. If $12,000 of the money they take out for school had been deducted on Illinois returns at 4.95 %, the add-back costs them $594 on top of any state tax on the earnings. The Illinois page has the rule and its source.
A Maryland family with one child, $140,000 of income and $18,500 of private school tuition faces a different result: the bill is under the cap, so $18,500 comes out with no federal tax, and Maryland treats it as qualified too. The Maryland page shows its deduction, which is per beneficiary.
Same tuition, another state
Tax-free from the 529 this year (federal)
$18,500
| Federal cap per child, 2026 | $20,000 |
| Above the cap | $0 |
| Federal tax and 10 % on that part | $0 |
| Maryland treatment | Treated as qualified |
Should a 529 pay for K-12 at all?
The tax-free growth of a 529 is worth more the longer the money stays invested. A deposit made in September and spent in January earns almost nothing, so the federal advantage on that dollar is close to zero. What remains is the state deduction or credit, where one exists and the state accepts K-12 use. In a state that gives a deduction on the way in and treats K-12 as qualified, passing tuition through the account can return a few hundred dollars a year with no market risk. In a state that adds the deduction back, the same move can cost money. The state-by-state table gives the rule of each state.
The second question is what is left for college. Money spent on fifth grade is no longer growing for the first year of college, when costs are larger. The college saving calculator shows the monthly amount behind a given target, and the 529 calculator shows growth year by year.
Records to keep
The plan sends the money; you prove what it paid for. Keep the school's invoice, the tutor's credentials and the receipt for each test fee in the same year as the withdrawal, and match the dates: a withdrawal in one tax year for a bill paid in another is a classic mismatch on an IRS letter. Some plans can pay the school directly, which leaves a cleaner trail. For a tutor, the law asks for one of three things: a teaching license in any state, past teaching at an eligible school, or subject matter expertise, and in all cases no family tie to the student.