Planning for your child’s education is one of the most meaningful investments you can make in their future. A 529 savings plan is designed to give families peace of mind and flexibility by helping them save for both college and K-12 education expenses. 

Thanks to recent federal updates, families may now use up to $20,000 each year from their 529 plan to cover K-12 tuition and a wide range of educational costs — from curriculum and tutoring to test fees and educational therapies. This expansion provides families with even more ways to support a child’s learning journey, no matter what path they take.

Qualified K-12 Expenses

A 529 savings account covers “qualified future and higher education expenses” for private and public colleges and universities, as well as vocational schools and community colleges. These qualified expenses include tuition and fees, room and board, textbooks and lab fees, special needs equipment, and some study abroad programs. Computers, internet, and related “peripheral equipment,” including mouses, speakers, and software, are considered qualified future and higher education expenses as well, but they must be used by the beneficiary primarily during their enrollment years.

When it comes to K-12 education, you can use up to $20,000 a year for qualified expenses, including:

• Tuition, including public, private and religious 

• Curriculum materials and books, including digital/online

• Tutoring and instructional classes 

• Standardized test fees, including the SAT, ACT, AP exams, etc. 

• Dual enrollment program fees

• Educational therapies for students with disabilities

K-12 Tuition and State Tax Benefits

Not all states have adopted the federal government’s expanded definition of qualified expenses. If your state offers tax benefits for 529s, you should understand what your state considers “qualified education expenses” before withdrawing money. Some states do not consider K-12-related expenses to be a “qualified” education expense. If this is the case with your state, a withdrawal made for K-12 expenses may be subject to state tax consequences if it is attributable to contributions that were deducted for state income tax purposes. Be sure to do your research, which may include consultation with your plan administrator, state tax department or financial advisor.

New Mexico Taxes and K-12 Tuition

New Mexico currently has a generous tax incentive for contributions to The Education Plan. The full amount of contributions to a New Mexico 529 plan can be claimed as a deduction for New Mexico individual income tax purposes when funds are used to pay for qualified education expenses. Keep in mind, you can contribute up to a maximum account balance of $500,000 for each beneficiary.

Ready to start saving for K-12 education and beyond? You can open an account with The Education Plan in just 15 minutes and start with as little as $1. 

This information is for general educational purposes and should not be considered financial advice or tax advice. We recommend consulting with a tax professional or financial advisor for personalized guidance.