What Can a 529 Plan Be Used For?

Let’s not beat around the bush: College is expensive. That’s why some people choose to invest their aftertax dollars in a 529 education savings plan, where funds can increase and be withdrawn tax-free.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 the following qualified higher education expenses according to the IRS, but there are some caveats to keep in mind. Some expenses may also be subject to limits.

And here are a few expenses you can’t use a 529 plan for:

• Transportation: Instead, save money by leaning into carpooling or using public transit or campus transportation.
• College application fees: Depending on where you apply, this can range anywhere from $30 to $90.
• Semester dues or fees for campus clubs: This includes fraternities, sororities, sports, and other nonacademic clubs.
• Health insurance: It doesn’t matter if the insurance is offered through the college or university.
• 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?

The short answer: It depends on where you live.

Starting in 2026, federal rules allow you to withdraw up to $20,000 a year (up from the previous limit of $10,000) from your 529 to pay for K-12 tuition without incurring federal tax penalties. In addition to tuition, the 2025 Tax Act also adds new qualified K-12 education expenses, including books, tutoring, standardized tests, and more.

However, some states still don’t recognize K-12 education as a qualified expense. Using your 529 from these states to cover K-12 tuition will be free from federal taxes but will incur state taxes or penalties. Check with your specific 529 before making any withdrawals.

In some states, you can use your 529 plan for K-12 education and get a corresponding income tax deduction on your contributions, up to a set limit. 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.