529 for K-12 Tuition After the 2025 Expansion

The line that cost me was on the withdrawal form, not the tuition bill.

Two radio buttons. Qualified higher education expense. Non-qualified withdrawal. There is no third button for "qualified under federal law, and my state has not said yet," which in 2026 is the honest answer for a lot of families taking money out for K-12.

Federal law changed twice in the space of six months, and the two changes did not start on the same day. State law mostly has not moved at all. Those are separate layers and mixing them up is how a tax-free withdrawal turns into a state tax bill in April.

Everything below is federal law and program-office material as I read it on August 16, 2026. I am a parent working from the statute and the IRS pages, not an attorney or a tax preparer, and nothing here is tax advice. Dollar figures and effective dates in this area were amended last year and can be amended again.

What Congress has already settled

The One Big Beautiful Bill Act (Public Law 119-21, enacted July 4, 2025) rewrote the K-12 part of Internal Revenue Code §529 in section 70413. Two distinct pieces, two distinct start dates.

The list of expenses got much longer, for distributions made after July 4, 2025. Before that, §529(c)(7) was one sentence and it said tuition. Now it is a list of eight lettered items, (A) through (H): tuition; curriculum and curricular materials; books or other instructional materials; online educational materials; tuition for tutoring or educational classes outside of the home; fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or examinations related to college or university admissions; fees for dual enrollment in an institution of higher education; and educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider.

Worth knowing before you rely on a summary: the IRS plain-language version at Tax Topic 313, last reviewed 06-Feb-2026, runs the same list but drops item (D), online educational materials, when I read it. The statute is the authority and it is short. Read it rather than a recap of it, mine included.

Read the tutoring item — (E) — in the statute itself before you pay anyone. It carries conditions the summaries drop. The tutor cannot be related to the student, and must be licensed as a teacher in any state, or have taught at an eligible educational institution, or be a subject matter expert in the relevant subject. A neighbor with a math degree may fit. A grandparent almost certainly does not, and the disqualification there is the family relationship, not the competence.

The annual cap doubled, but a year and a half later. $10,000 per beneficiary applied for years before 2026. §529(e)(3)(A) now reads $20,000, and that increase applies to taxable years beginning after December 31, 2025. So a 2025 withdrawal for a newly-eligible expense like curriculum was federally qualified from July 5 onward, but it still had to fit inside the old $10,000 ceiling for that year.

Three details about the ceiling that people get wrong:

• It is per beneficiary, not per account. The statute caps distributions "from all qualified tuition programs" for that child in the aggregate. If a grandparent holds a second 529 for the same child and takes $12,000 the same year you take $12,000, the total is over.
• It covers the whole list, not tuition alone. There is no separate $20,000 for curriculum on top of $20,000 for tuition.
• Nobody is enforcing it for you. The plan sends a Form 1099-Q showing what came out. It does not know what you bought. Matching the distribution to expenses, and staying under the cap, is your recordkeeping problem entirely.

Your state answers this separately, and can answer it differently

Here is the thing that makes this topic genuinely hard rather than just long: a withdrawal has two tax characters at once. Federal and state. They do not have to agree, and in several states they flatly do not.

Your state is really answering two questions, and you need both answers:

1. Is this withdrawal qualified for state income tax? If not, the earnings portion goes into your state taxable income even though it was tax-free federally.

2. Does a deduction I already took get clawed back? Many states give a deduction or credit for contributions. A number of those states recapture it when the money comes out for something the state calls nonqualified. That one stings because it hits contributions, not just growth.

Two states show how far apart the answers sit. New York's official program page on the 2026 federal tax updates says it without hedging: "K-12 tuition expenses are considered nonqualified withdrawals for New York State tax purposes." New York also recaptures previously deducted contributions on a nonqualified withdrawal, but that rule is not on the page just quoted — it lives in the plan's disclosure booklet and the state's addition modifications, so confirm it there rather than taking my word for the pairing. California treats K-12 distributions as nonqualified too, and the earnings portion goes on FTB Form 3805P with an additional California tax on top of ordinary state income tax — 2.5% per the form instructions, which are reissued yearly, so open the current version rather than trusting a number in a blog post, including this one.

California, New York, Colorado, Hawaii, Illinois, Minnesota, New Mexico and Oregon are commonly listed among the states that never adopted K-12 as qualified. Treat that as a starting point for your own check, not as an answer. Legislatures amend this in session and the lists circulating online age badly.

How to check your own state, in this order. Not a Google search — three documents.

1. Your plan's disclosure booklet and its latest supplement. Supplements are where a program office records a federal change before the main booklet is reissued. This is also where you will find the state tax section written by people with a legal obligation to get it right.
2. Your plan's own "federal tax updates" or news page. New York's is the model: it states what is decided and, more usefully, what is not.
3. Your state revenue department's form for additional taxes on tax-favored accounts, and the state's addition/subtraction schedule for the income tax return. If the earnings portion of a nonqualified 529 distribution has a line on a state form, that line tells you the state's position more reliably than any explanation of it.

Call your plan and ask specifically: "For state income tax purposes, is a distribution for [the expense] qualified, and does it recapture a prior state deduction?" Ask for it in writing, or at least note the date and the name.

The classification also decides the plumbing, which is easier to see in a plan document than on a phone call. New York's Direct Plan booklet — a base document dated September 30, 2021, with the federal change carried in a supplement dated October 2025 — sets out the routes: a New York Qualified Withdrawal can be paid by check to the account owner or the beneficiary, by ACH to the owner, or by check directly to an eligible educational institution, while a nonqualified one is paid only by check or EBT to the account owner. Because that plan treats K-12 tuition as nonqualified for New York, it will not send the money to the school for you. Read your own plan's withdrawal section for the same reason: what the state calls the withdrawal changes where the money is allowed to land.

The parts nobody has answered yet

This is the section the 529 marketing pages skip, and it is where most of the real questions are.

Homeschool-only families. Every headline in July 2025 said 529s now cover homeschool curriculum. The statute is narrower than the headline. §529(c)(7) attaches the whole expanded list to expenses "in connection with enrollment or attendance at, or for students enrolled at or attending, an elementary or secondary public, private, or religious school." That clause was widened in 2025 — the "or for students enrolled at or attending" half is new — but it still names three kinds of school and homeschool is not among them. Item (E) even prices tutoring as instruction outside of the home, which cuts the other way for a family teaching at home.

So whether your child qualifies appears to turn on whether your state classifies a homeschool as a private school, which some states do and many do not. As of August 16, 2026 I have not found an IRS notice, publication passage, or FAQ that resolves it for a child enrolled in no school at all, and I would not read the silence as permission. If your homeschool operates under an umbrella or cover school that is a private school in your state, your footing is better. If it does not, get an answer in writing before you withdraw, not after.

States that have not ruled on the new categories. New York again, verbatim from its own page: the Department of Taxation and Finance "has not yet determined whether the additional K-12 Expenses and Credentialing Expenses would be considered nonqualified withdrawals for New York State tax purposes." An undecided state is not a permissive state. It is a state that may decide against you retroactively for the year you are in now.

Whether conforming legislation arrives. States with rolling conformity may pick the federal definition up automatically; states with fixed-date conformity need a bill. Which yours is, and whether a bill moved in the 2026 session, is a question for your revenue department, not for a savings-plan brochure.

Stacking with an ESA or a scholarship. If a state education savings account, voucher or tax-credit scholarship already paid an invoice, do not assume the same invoice can also justify a 529 withdrawal. The same dollar of expense generally cannot be covered twice, and I have not found IRS material addressing state ESA payments by name. This one is worth a preparer's time, not a forum's.

The closest federal text to any of this is Publication 970, and on both questions it hands you back to state law. Its QTP chapter defines an eligible elementary or secondary school as any public, private or religious school providing kindergarten through grade 12 education "as determined under state law" — so the homeschool question is a state classification question in the IRS's own wording. On stacking, the same chapter says adjusted qualified education expenses must be reduced by "any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance," a phrase wide enough to reach a state ESA payment and specific enough to name none. One caution about that publication generally: the edition written for 2025 returns still frames the K-12 paragraph as no more than $10,000 of tuition, which was correct for 2025 and is not the 2026 number.

Before you press submit

The mechanics are boring and they are where claims fall apart.

• Same calendar year. Take the distribution in the year the expense is paid. A December tuition payment funded by a January withdrawal is a mismatch you will have to explain.
• Decide who receives it. A distribution can go to you or to the school. That choice decides whose Social Security number is on the 1099-Q, and it is easier to reconcile when the same person who receives the money is the one holding the receipts.
• Keep the invoice, not the bank line. An itemized invoice naming the child, the school year and the amount. A card statement showing a payment to a school is not documentation of what the payment was for.
• Split the withdrawal if you are unsure. Take the clearly-covered part now and hold the gray part until you have a written answer. Money left in the account has no deadline. A withdrawal already taken cannot be un-taken cleanly.

Splitting the withdrawal does not split its tax character, and that is worth knowing before you rely on the tactic. The earnings portion is figured across the account rather than the piece you took — New York's booklet says that even when you name one investment option, earnings for tax reporting are calculated on the earnings of all options in the account, so both halves of a split carry the same ratio. The same booklet is plain about the limits of what a plan reports: it splits the distribution into earnings and basis and "we do not report whether the withdrawal is a Federal Qualified Withdrawal or a Federal Nonqualified Withdrawal." The 1099-Q reaches you by January 31 (February 2 for 2025 forms), it has no box that distinguishes K-12 from college, and the only record that says what the money bought is the one you keep.

One boundary worth drawing before any of that: a 529 is your own money with a tax wrapper, and it is not a state program. If part of the tuition is meant to come from an ESA or a voucher instead, that side runs on applications, income tiers and closing dates — which of those programs you are actually in decides who reviews you, and what the application asks for and when the window shuts is a different calendar from this one.

The assumption I made in 2025

I moved on the headline rather than the statute. The summer coverage said the expense list had opened up, and it had — federally. What I never separately asked was what my own state considered qualified, because I had quietly assumed that a state offering a deduction for contributions must accept the federal definition of a withdrawal. Those are unrelated provisions and nothing forces them to agree. Reading the disclosure booklet supplement first would have taken twenty minutes.

The second habit I lacked was dating things. A statute amended in July, an IRS page reviewed in February, a state that has decided one half of the question and not the other — the correct answer genuinely depends on when you asked it. An undated note is worth nothing next April, and I now write the source and the date beside every answer I get, including the ones I get by phone.

The supplement, not the booklet

Plan disclosure booklets are reissued slowly. Supplements are not, which is why the supplement is where a program office records a federal change first — and why the booklet on your shelf can be describing a rule that stopped being true in July 2025.

Find the most recent supplement for your plan, open its state tax section, and read two things: how the state treats a K-12 distribution, and whether it recaptures contributions you previously deducted. Write the supplement's date beside what you find. That page, not the federal one, decides whether your $20,000 is really $20,000.

If your plan's supplement contradicts something written here, send me the wording and the date it carries — corrections reach me here and the page gets re-dated when one lands.