529 plans now cover tutors, and the break may be $110

Congress doubled what a 529 plan can spend on K-12, to $20,000 per child in 2026, and the federal tax it saves on money spent early stayed small, about $110 on $10,000 held one year at an assumed 5 percent. The money can now pay tuition, books, test fees and a qualified tutor.

$110

Federal tax saved on $10,000 held for one year, at 5% growth, which is our assumption, in the 22% bracket.

Source: our calculation from 26 U.S.C. 529, 2024 edition.

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The 2025 budget law changed the shopping list and left the discount alone. It widened the K-12 list for withdrawals after July 4, 2025, and raised the yearly limit from $10,000 to $20,000 starting in tax year 2026. A 529 plan, a tax-favored education savings account usually run by a state and named after its section of the tax code, gets no federal deduction on the way in, and the part of a withdrawal that is your own deposit was never going to be taxed. Only the earnings escape federal tax, so money that passes through quickly gives the break almost nothing to touch.

On $10,000, one year in the account saves $110 and 13 years save $1,948

At an assumed 5% a year, three years in the account saves under $400 in federal tax on $10,000, in every bracket shown.

Years in the account	Earnings	12% bracket	22% bracket	24% bracket
1	$500	$60	$110	$120
2	$1,025	$123	$226	$246
3	$1,576	$189	$347	$378
5	$2,763	$332	$608	$663
10	$6,289	$755	$1,384	$1,509
13	$8,856	$1,063	$1,948	$2,126

Source: Our calculation for a $10,000 deposit, with growth assumed and brackets from IRS Revenue Procedure 2025-32. Joint filers in 2026 sit in the 12% bracket up to $100,800 of taxable income, 22% up to $211,400 and 24% up to $403,550.

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How we calculated it. Earnings are $10,000 times 1.05 to the power of the years, minus $10,000, and the saving is earnings times the bracket. Plan fees are left out, and a year with no growth saves nothing.

Set against a savings account taxed every year, the 10-year saving at 22 percent is closer to $1,628 than $1,384. Set against a stock fund it is smaller, because long-term gains get lower rates, and joint filers pay 0 percent on them in 2026 up to $98,900 of taxable income. That covers nearly the whole 12 percent bracket, so a family there may save nothing.

Run the full $20,000 through for one year and the saving is $220 at 22 percent, or $120 at 12 percent. A 24 percent bracket doubles what a 12 percent bracket saves, so the break favors higher earners and patient ones.

An older college fund changes the math, because every withdrawal carries its share of earnings. On our assumption, $10,000 deposited 10 years ago is now $16,289, and a $10,000 withdrawal carries $3,861 of earnings, saving $849 at 22 percent, out of money that then stops growing toward college.

One $20,000 limit covers every K-12 cost, and the laptop is not on the list

The limit is per child, per year, across every plan that holds money for that child, and all eight items in the law draw on it. A year of $20,000 tuition leaves nothing for the tutor, and a grandparent’s second account does not open a second limit. Public school families qualify too, since the law says “public, private, or religious school.”

The 2025 law reaches tutors, books and therapy, and it still stops short of the laptop, the uniform and the school bus.

Cost	Counts?
School tuition, curriculum, books and other instructional materials, online educational materials	Yes
Tutor or class outside the home, including at a tutoring facility	Yes, if the tutor passes the test below
Tutor at your home, or one related to the student	No, on the text as it stands
Fees for college admission exams, advanced placement exams and nationally standardized tests, and for dual enrollment, college classes taken in high school	Yes
Occupational, behavioral, physical or speech-language therapy for a student with a disability	Yes, from a licensed or accredited provider
Laptop or tablet	Not on this list, so treat it as no. The IRS allows computers only for students “enrolled at an eligible postsecondary school”
Uniform, school bus, after-school care, boarding school room and board	Not on this list, so treat it as no
Preschool	No. IRS Topic 313 starts at “kindergarten”
Homeschool costs	Only if state law treats your homeschool as a school

Source: Public Law 119-21, sec. 70413; 26 U.S.C. 529 and 530, 2024 edition, printed before the 2025 law; IRS Publication 970 for 2025 and Topic 313.

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Section 530, the rule for Coverdell savings accounts, an older kind of education account, does name room and board, uniforms and transportation a school requires or provides, along with extended-day programs.

A licensed teacher who is also your sister fails the tutor test

The law sets three conditions, and Publication 970 repeats them. The lessons happen outside the home. The tutor is not related to the student. And the tutor is licensed as a teacher in any state, has taught at an eligible school, which Publication 970 reads as a college or a K-12 school, or is “a subject matter expert in the relevant subject.” The code’s own definition of an eligible school, in section 529(e)(5), covers colleges and other postsecondary schools only, so a teacher with no license and only K-12 years is leaning on the IRS’s reading.

The expert phrase has no definition in the law or in Publication 970, and no IRS notice on this section had appeared as of November 1, 2026. The guidance plan Treasury issued on September 29, 2026 lists section 529 guidance as still to come, so a definition may yet arrive. The law is just as quiet on a live online session your child takes from home, since its online item covers “materials” and its tutoring item says “outside of the home.” Where the text is silent, the narrow reading is the one that cannot cost you.

Ten states say no to K-12, and their clawback can top the federal saving

The IRS’s answer does not bind your state. Each state with an income tax decides for itself, and a withdrawal the IRS is happy with can still bring state tax on the earnings and a clawback, or recapture, of the deduction you took going in.

On money spent early, your state can move more dollars than the IRS, for you or against you. At a 5 percent state rate, our assumption again, deducting a whole $10,000 deposit saves $500 that year, where a state allows that much. The federal saving does not pass $500 until year 5 in the 22 percent bracket and year 8 in the 12 percent bracket.

Where the state counts the withdrawal, the deduction stays, and after three years the account has saved $926, federal and state together. Where the state leaves K-12 out, the same withdrawal brings a $579 state bill in one year, $500 of deduction coming back plus $79 on $1,576 of earnings, and what you keep is the federal $347. On that pattern you end up about where you would be had you never taken the deduction, which is thin comfort the April it arrives.

Out means the state’s document rejects K-12 withdrawals, at least for its deduction or credit. Tuition named means it approves K-12 tuition and does not approve the tutors, books and therapy added in 2025. Most of these are silent on them, so you have to ask, and Indiana rules them out in writing. Follows federal means it ties the state to the federal rule, though some of these pages still show the old $10,000.

Ten states say no, seven name only tuition and eight follow the federal rule, often in documents older than the 2025 list.

State	K-12 at state level	What happens
Arizona	Follows federal	State law borrows the federal K-12 paragraph and sets “not more than $20,000.”
California	Out	Its 2025 instructions break from the federal K-12 rule, and Form 3805P taxes the earnings and adds 2.5%. No deduction to claw back.
Colorado	Out	Not qualified, says a March 2025 tax topic. Add back your deposits, the box 3 amount on the plan’s Form 1099-Q. No deduction for money meant for K-12, and a 2020 legislative note, on a bill that failed, reads the law the same way.
Delaware	Out	“The deduction will NOT apply” to K-12 tuition, says an undated treasurer page. Silent on earnings.
Georgia	Tuition named	K-12 tuition is free of Georgia income tax, to $10,000 a year, by a December 2022 release. A July 2026 treasurer notice is silent on newer items.
Hawaii	Out	State law for years after 2024 says federal section 529(c)(7), the K-12 paragraph, “shall not be operative.” Act 35 of 2026, which updated the state’s tie to the federal code, kept that wording.
Idaho	Tuition named	Tuition “up to $10,000 per year per student” qualifies, on the tax commission’s page as saved in July 2026. Money not used for qualified costs goes back into Idaho income.
Illinois	Out	Not qualified, and earlier deductions are added back on Schedule M, per a non-binding March 2024 revenue letter.
Indiana	Tuition named	Only tuition at an in-state school, to $20,000 from 2026. A January 2026 bulletin rules out tutoring, books, online materials, test fees, dual enrollment and therapy, and those withdrawals can recapture the credit even with no income tax due.
Iowa	Tuition named	Up to $20,000 from 2026 for tuition at an accredited Iowa school, or out of state for a child requiring special education, by Schedule 1 of the 2025 return. Other withdrawals added back if deducted.
Maryland	Follows federal	The state “conforms to the federal tax treatment” of K-12 withdrawals, says a 2020 fiscal note. A 2026 bill to add them back to income got a House hearing and went no further.
Massachusetts	Follows federal	A June 2026 revenue notice answers “Yes” on adopting the 2025 K-12 section, and the governor’s fiscal 2027 budget says the added costs “will be allowed at the state level.”
Minnesota	Out	Not qualified, and the 2026 form draft names tutoring. Earnings go on Schedule M1M, and earlier credits or subtractions are recaptured, by the 2025 form.
Mississippi	Tuition named	K-12 tuition capped at $20,000 per student, on an undated treasurer page. Other uses: earnings taxed, deducted money back in income.
Montana	Tuition named	The revenue department allows “up to $20,000 of tuition.” Other withdrawals face a recapture tax, 5.9% on the 2025 return.
Nebraska	Out	The 2025 tax booklet calls K-12 tuition “a non-qualified use.” Deductions come back, up to the amount received. K-12 costs count from January 1, 2029, tutoring included, after LB 748 of 2026 widened the rule.
New Jersey	Follows federal	“New Jersey follows the federal expansion” for K-12 tuition, says a May 2025 notice that predates the 2025 law.
New York	Out	Nonqualified under the state’s own program, by 2025 Form IT-225. Earlier deductions are added back.
Ohio	Follows federal	Uses “the same definition” as federal law, says an undated tax FAQ that still shows K-12 tuition at $10,000.
Oregon	Out	Nonqualified, by Publication OR-17 for 2025. Add back the amount withdrawn if you subtracted it, recapture any credit, and add the federally exempt earnings.
Pennsylvania	Follows federal	A 2006 revenue bulletin excludes what section 529(c)(3)(B) excludes federally, and an August 2026 treasury notice lists K-12 among qualifying costs. Neither spells out the 2025 items.
South Carolina	Follows federal	State law ties a qualified withdrawal to section 529 “as amended,” and a 2020 revenue letter applies that to K-12 tuition at that year’s federal cap, then $10,000. Above the federal cap, earnings taxed and deduction recaptured.
Utah	Tuition named	Earnings are state-exempt for K-12 tuition, to $10,000 per child, in a July 2019 program description. Silent on newer items.
Vermont	Out	Repay 10% of the distribution, up to the credits you received. A 2019 bulletin says K-12 costs trigger it.
Wisconsin	Follows federal	The 2025 Schedule CS prints the full 2025 federal list, at the 2025 cap of $10,000.

Source: The state documents linked in each row, read in November 2026. The labels are our reading of them.

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A row needs a state document that says what the state’s own tax does with a K-12 withdrawal. That admits 25 of the 42 jurisdictions that tax income broadly, 41 states and the District of Columbia by Census tax collections for fiscal 2024. The other 17 are Alabama, Arkansas, Connecticut, the District of Columbia, Kansas, Kentucky, Louisiana, Maine, Michigan, Missouri, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, Virginia and West Virginia. Treasurer pages in Arkansas, Kansas, Oklahoma, Rhode Island and West Virginia call K-12 an allowed use and stop short of state tax, and several of the others sit on state sites that would not open for us, so a missing row tells you we could not settle it, and nothing about what the state decided. Ten refusals out of 25 is no national rate, either. A state that says no has to write it down, while one that goes along with the federal rule can stay quiet. Alaska, Florida, Nevada, South Dakota, Texas and Wyoming collected no individual income tax in fiscal 2024, and New Hampshire, Tennessee and Washington showed only small or narrow collections.

To check yours, start from the IRS list of state tax agencies, open the current individual income tax instructions, and find the line for 529 or “qualified tuition program” additions. Look for the words elementary, secondary and K-12. Most state forms for tax year 2026 are not out as of November 1, 2026, so a row above is a place to start and the current form is the answer. The rows are also in a data file.

If the form says nothing, send your state revenue department this question, filled in, before the first K-12 withdrawal.

I file a resident [state] return and claimed a [deduction or credit] for 529 contributions. In [year] I plan to withdraw $[amount] to pay a tutor who teaches outside my home and is not related to my child. Is that withdrawal qualified for [state] income tax, and if not, which lines of the return recapture the deduction and tax the earnings?

The plan’s tax form never asks what you bought, so the proof is on you

Each year you withdraw, the plan issues Form 1099-Q. Box 1 is the total, box 2 the earnings, box 3 your own deposits. There is no box for expenses, and the form’s own instruction reads, “You must determine the taxability of any distribution.” A withdrawal fully covered by qualified costs does not even go on your return, so the IRS sees a payout and no explanation until it asks. Your receipts are the explanation.

Overdraw, or spend on something off the list, and the tax falls only on the earnings share. Take out $10,000 that includes $1,000 of earnings, spend $8,000 on qualified costs, and $200 of earnings become taxable. That is $44 of income tax at 22 percent, plus the 10 percent additional tax on the same $200, another $20. The income goes on Schedule 1, line 8z, and the additional tax on Form 5329. It lands on whoever the form names, which is the account owner unless the plan paid the child or the school directly.

A tax-free scholarship and a 529 can’t double-dip on one bill

A bill paid by a tax-free scholarship cannot also be a 529 expense. Section 529 reduces your expenses “as provided in section 25A(g)(2),” and that section subtracts scholarships and other education payments excludable from income under federal law, and Publication 970 says the same.

The federal scholarship credit that starts in 2027 funds scholarships the 2025 law leaves out of income, in new Section 139K. Read together, those texts mean one bill, one source. Nothing published through November 1, 2026 applies the rule to those scholarships by name, and the proposed rules of October 2026 never mention 529 plans. If a scholarship is what makes a withdrawal taxable, Publication 970 waives the 10 percent additional tax up to the scholarship amount, and the income tax stays.

Pay the tutor and withdraw in the same tax year

The IRS asks for records such as receipts and canceled checks, and its general rule is to keep them three years. A tutor needs more than a receipt, because the law’s conditions are about the person.

An invoice with the student’s name, the tutor’s name, the dates, the subject, the amount and the address where the lessons happen.
The test the tutor meets: license state and number, school and years taught, or what makes this person an expert in the subject.
A signed line from the tutor saying they are unrelated to the student.
Proof of payment, dated in the same tax year as the withdrawal.
A school letter or report card showing your child is enrolled.
That year’s Form 1099-Q, with a running total against the $20,000 limit.

The dates on those papers have to agree. The IRS compares a year’s withdrawals with the expenses paid that same year, so a December 2026 withdrawal for a January 2027 tutor bill matches nothing in either year. Pay that bill in January 2027, take the money out in January 2027, and file all of it under 2027.

Can I use another state’s 529 plan for K-12 costs?

Any state’s plan works for the federal break, and the IRS says so directly. A state deduction is a separate matter, and some attach to the state’s own plan, as New York’s and Colorado’s do, so an out-of-state account can leave that part behind.

Why do some IRS pages still say $10,000?

The limit for tax year 2025 was $10,000, and Publication 970 for 2025 reflects that, though withdrawals after July 4, 2025 already fall under the wider list. An IRS question-and-answer page last reviewed January 30, 2026 also shows the old figure, while IRS Topic 313, reviewed September 24, 2026, gives $20,000.

What if a school or tutor refunds a payment I made with 529 money?

Publication 970 lets a refund go back into a 529 plan for the same student within 60 days, which spares you from figuring tax on that part. The tax code ties the rule to a refund “from an eligible educational institution,” a term it defines around colleges, so a K-12 school’s refund leans on the IRS’s reading and a private tutor’s is not clearly covered.

The tables we built and the calculations we ran on this page are free to reuse under Creative Commons Attribution 4.0: credit Kidsomnia and link here. Government figures inside them stay under the agency’s own terms.