529 Qualified Expenses: What a 529 Plan Can Pay For Tax-Free
529 qualified expenses are the education costs you can pay from a 529 plan with no federal tax on the earnings. These include college tuition, fees, books, required supplies, room & board (if the student is enrolled at least half-time), and computers or internet used for school.
A 529 can also cover K-12 tuition up to $20,000 per year in 2026, registered apprenticeship costs, and up to $10,000 lifetime toward student loans. Spend on anything else and the earnings portion gets hit with income tax plus a 10% penalty.
This guide shows exactly what counts, what does not, and the one room & board rule most families miss.
The core list: what a 529 pays for tax-free
A 529 plan covers most real costs of higher education. Qualified expenses include tuition and mandatory fees, books, and supplies or equipment required for your courses. If the student is enrolled at least half-time, room & board also qualifies. So do computers, printers, software, and internet access used primarily by the student while enrolled.
The school must be an eligible institution — one that can take federal student aid. That covers nearly all accredited U.S. colleges, universities, and many vocational schools. Withdrawals for these costs are free from federal income tax, and usually state tax too.
Deciding how much to save toward these costs? Run the numbers with our 529 savings calculator, and see how a 529 stacks up against other options in our best investment account for kids guide.
K-12 tuition: up to $20,000 per year in 2026
A 529 can pay for private or religious K-12 school tuition, up to $20,000 per beneficiary per year as of 2026. This is a big jump from the old $10,000 cap. The limit is per student, not per account, so it applies across all 529 plans for that child.
One catch: at the K-12 level, only tuition clearly qualifies for federal purposes. Room & board, books, and supplies for K-12 are treated differently than at the college level. Some states also do not follow the federal rule and may tax or penalize K-12 withdrawals at the state level.
Check your own state's treatment before pulling money for private school. A withdrawal that is federally fine can still trigger a state tax bill or clawback of a past state deduction.
Room & board — and the off-campus rent trap
Room & board is a qualified 529 expense only if the student is enrolled at least half-time. On-campus housing is simple: the amount you pay the school qualifies.
Off-campus is where families overspend. Rent and food only qualify up to the school's published cost-of-attendance room & board allowance for off-campus students. If your child rents a $2,000/month apartment but the school's allowance is $1,200/month, only $1,200 qualifies. The extra $800 is a non-qualified withdrawal — the earnings portion owes income tax plus the 10% penalty.
The fix is simple: pull the school's published cost of attendance from the financial-aid office, and keep your 529-paid housing at or under that allowance. Keep receipts.
Computers, apprenticeships, and student loans
Computers and technology count. A laptop, related equipment, software, and internet access qualify as long as they are used primarily by the student during enrollment. General-purpose software or a gaming PC does not qualify.
Registered apprenticeship programs are also covered. Fees, books, supplies, and required equipment for a program registered with the U.S. Department of Labor are qualified 529 expenses.
A 529 can also repay student loans — up to $10,000 lifetime per beneficiary, plus a separate $10,000 lifetime limit for each of the beneficiary's siblings. This is a lifetime cap, not annual. Have leftover money after these options? See your full menu in 529 leftover money options.
What does NOT qualify (and the penalty)
Plenty of college-life costs are not 529 qualified expenses. Transportation and travel — flights home, a car, gas, parking — do not qualify. Neither does student health insurance, most extracurricular fees, sports and club dues, or general living costs beyond the room & board allowance.
When you spend 529 money on a non-qualified expense, only the earnings portion is taxed — your original contributions come out tax-free. But those earnings owe ordinary income tax plus a 10% federal penalty. The 10% penalty is waived in specific cases, such as the beneficiary receiving a scholarship (up to the scholarship amount), attending a U.S. military academy, or becoming disabled.
Before taking a non-qualified withdrawal, weigh alternatives like a Roth IRA rollover or changing the beneficiary. Also compare the 529's rules against a Coverdell ESA or a Trump Account vs a 529, which handle education spending very differently.
Frequently asked questions
Can a 529 pay for private school (K-12)?
Yes. A 529 can pay K-12 tuition at private or religious schools, up to $20,000 per student per year in 2026. Only tuition clearly qualifies at the K-12 level — not room & board or supplies — and some states do not follow the federal rule, so check your state's treatment first.
Can I use a 529 for student loans?
Yes, up to $10,000 lifetime per beneficiary toward qualified student loans, plus a separate $10,000 lifetime limit for each of the beneficiary's siblings. This is a lifetime cap, not an annual one. Interest paid this way cannot also be deducted as student-loan interest.
Does room & board count as a 529 qualified expense?
Yes, but only if the student is enrolled at least half-time. On-campus housing qualifies up to what you pay the school. Off-campus rent and food qualify only up to the school's published cost-of-attendance room & board allowance.
How much off-campus rent does a 529 cover?
A 529 covers off-campus rent and food only up to the school's published cost-of-attendance room & board allowance for off-campus students. If your rent is higher than that allowance, the excess is a non-qualified withdrawal — so overpaying rent isn't fully covered. Get the allowance figure from the financial-aid office.
Can a 529 pay for a computer?
Yes. A computer, related equipment, software, and internet access are qualified 529 expenses if they are used primarily by the beneficiary while enrolled. A general-purpose or gaming computer used mainly for entertainment does not qualify.
What happens if I use 529 money for a non-qualified expense?
The earnings portion of a non-qualified withdrawal is taxed as ordinary income plus a 10% federal penalty; your contributions always come out tax-free. The 10% penalty is waived in certain cases, such as a scholarship (up to its amount), a service-academy appointment, disability, or death of the beneficiary.
Sources
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