Your 529 May Do More Than You Think This School Year
What changed in 2026, and why the bigger question is when to use it
WEEKLY BLOG 08/24/26 – 08/28/26
August has a way of making school expenses feel like they all show up at once.
Tuition. Books. Tutoring. Test prep. Activities. College costs. Maybe a laptop that somehow costs more than the first car you drove.
Most parents know what a 529 plan is. Fewer realize the rules around what that money can pay for have changed.
And beginning in 2026, the list got meaningfully longer.
The 529 You Remember Is Not the 529 You Have Today
Most families still think of a 529 as a college savings account.
That is still its primary purpose. But under the federal rules for 2026, 529 money can now cover a broader range of K-12 expenses.
For a student enrolled in a public, private, or religious elementary or secondary school, qualified expenses can include tuition, curriculum and instructional materials, books, certain tutoring, standardized and college-admissions testing fees, dual-enrollment fees, and certain educational therapies for students with disabilities.
The annual K-12 distribution limit also increased to $20,000 per beneficiary, up from $10,000 before 2026.
529 funds can also be used for certain registered apprenticeship costs and qualified postsecondary credentialing expenses.
|
|
Before 2026 |
Starting 2026 |
|
Annual K-12 distribution limit |
$10,000 per beneficiary |
$20,000 per beneficiary |
|
K-12 qualified expenses |
Tuition only |
Tuition, curriculum and materials, books, certain tutoring, testing fees, dual-enrollment fees, certain therapies |
|
Postsecondary credentialing and apprenticeship costs |
Not covered |
Covered for qualifying programs |
Source: Internal Revenue Service, Topic No. 313 and Publication 970.
That creates more flexibility.
But flexibility creates another question.
Just because you can use the money does not necessarily mean you should.
The Real Question Is When to Use It
Imagine you have been saving into a 529 since your child was young.
Now that child is in private school, and you suddenly have the ability to use more of the account for expenses you are already paying.
At first glance, that feels like an easy decision.
Why not use it?
Maybe you should.
Every dollar that comes out today is a dollar that is no longer invested for college later.
If college is still eight years away, that matters.
On the other hand, a family that has aggressively funded several 529 accounts may decide using some of that money earlier makes sense, especially if it frees up cash flow for retirement savings, debt reduction, or another goal.
Neither answer is automatically right.
That is the planning part.
A tax rule tells you what you are allowed to do.
A financial plan helps determine whether doing it actually improves your situation.
There Is Another Tax Angle
This gets even more important once college begins.
The tax code offers several different education benefits, and you generally cannot use the same education expense twice.
For example, the same tuition expense generally cannot be used both to support a tax-free 529 withdrawal and to claim an education credit such as the American Opportunity Tax Credit.
This is where a seemingly simple decision can become less simple.
You have the 529.
You have tuition due.
You take the withdrawal.
Then tax season comes around months later and someone realizes those expenses could have been coordinated differently.
Nothing dramatic happened.
There was just no one looking at both sides of the decision at the same time.
That is exactly why tax planning and financial planning should not live in separate rooms.
Back-to-School Season Is a Good Time to Look
If you have children or grandchildren and a 529 account, this fall is a good time to look at three things:
• What education expenses are you actually paying?
• Which of those expenses may qualify under the current 529 rules?
• Which expenses should you pay from the 529 versus cash flow or another source?
Those are three different questions.
And the third one is usually the most important.
The goal is not to find every possible reason to withdraw money from a 529.
The goal is to use the account in the way that best fits the rest of the financial plan.
Looking at the tax picture and the financial plan together, before a withdrawal happens rather than after, is what makes the difference.
That is what planning is supposed to do.
If you have 529 accounts and want a second look at how they fit into the plan, this is a good time to bring them into the conversation. You may have more options than you realize.
Sources
Internal Revenue Service, Topic No. 313, Qualified Tuition Programs. https://www.irs.gov/taxtopics/tc313
Internal Revenue Service, Publication 970, Tax Benefits for Education. https://www.irs.gov/publications/p970
Internal Revenue Service, No Double Education Benefits Allowed. https://www.irs.gov/newsroom/no-double-benefits-allowed-understanding-irs-guidelines-on-education-related-tax-breaks
Stock Market Calendar This Week:
|
Time (ET) |
Report |
| Monday, Aug. 24 | |
| No events scheduled | |
| Tuesday, Aug. 25 | |
| 8:30 AM | FRB Richmond President Thomas Barkin speaks at Montgomery County Chamber of Commerce event |
| 9:00 AM | S&P Cotality Case-Shiller Home Px Index |
| 10:00 AM | New Home Sales |
| 10:00 AM | Conference Bd – Consumer Confidence |
| 4:00 PM | FRB Richmond President Thomas Barkin speaks at Charlotte Regional Business Alliance event |
| Wednesday, Aug. 26 | |
| 8:30 AM | Durable Goods |
| 8:30 AM | 2nd estimate GDP |
| 8:30 AM | Personal Income, M/M% |
| 8:30 AM | Consumer Spending, M/M% |
| 8:30 AM | PCE Price Idx, M/M% |
| 8:30 AM | PCE Price Idx, Y/Y% |
| 8:30 AM | PCE Core Price Idx, M/M% |
| 8:30 AM | PCE Core Price Idx, Y/Y% |
| 11:45 AM | FRB Richmond President Thomas Barkin participates in Greensboro Chamber of Commerce event |
| Thursday, Aug. 27 | |
| 8:30 AM | Weekly Jobless Claims |
| 8:30 AM | Advance U.S. Trade Balance in Goods |
| 8:30 AM | Wholesale Inventories |
| 8:30 AM | Retail Inventories |
| 11:00 AM | Kansas City Fed Survey |
| Friday, Aug. 28 | |
| 9:45 AM | Chicago Business Barometer – ISM-Chicago Business Survey – Chicago PMI |
| 10:00 AM | U. Michigan Final Consumer Survey |
About Amit: I am a first generation American, the son of a working-class Indian family, and I lived through my parents’ struggle to find their place in this country, to put down roots that would sustain them as well as their children in a new land. As they encouraged me to excel in school and fostered my hobbies and interests, I was keenly aware of the dynamic between them. I understood that there was a difference between where they came from individually and where we were now. They worked hard in their individual capacities, but they weren’t always on the same page about financial issues – and that can make or break a family’s future. I didn’t know it at the time, but this laid the groundwork for my passion towards financial services and helping families succeed.
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