Using a 529 Plan for K-12 Private School Tuition: 2026 Rules After the One Big Beautiful Bill Act

Public school tuition is typically free, so there is generally no tuition to pay. However, some magnet schools, specialized public schools, or charter schools may charge fees. The $20,000 annual K-12 limit in 2026 applies to any tuition at elementary or secondary schools, whether public, private, or religious. Other K-12 expenses like curriculum materials, tutoring, and standardized test fees are also qualified under the OBBBA 2026, regardless of whether the school is public or private.

Not necessarily. While federal law allows 529 withdrawals for K-12 tuition and expanded expenses up to $20,000 per year (post-OBBBA), some states have not conformed to these rules. States like California, Colorado, Hawaii, Illinois, Minnesota, Montana, New Hampshire, New Jersey, New Mexico, New York, Oregon, and Vermont may treat K-12 529 withdrawals differently for state tax purposes. In non-conforming states, K-12 withdrawals may trigger state income tax even though they are federally tax-free. Check your state's conformity before making K-12 withdrawals.

Many financial planners recommend opening a separate 529 account for K-12 expenses rather than drawing from the college savings account. Here is why: if you withdraw from your college 529 for K-12 expenses, you reduce the balance that benefits from long-term compound growth. A separate K-12 529 can be invested more conservatively (bonds, money market) since the time horizon is shorter, while the college 529 remains in more aggressive growth-oriented investments. The separate account strategy also makes recordkeeping cleaner. There is no IRS rule requiring separation; it is purely a strategy preference.