Happy 2026! We’ve all started a new chapter with the new year, so now is the time to move forward with your resolutions. These could range from plans to improve your own or your family’s health, to travel, to read more, or to saving for your children’s future.
Ohio 529 CollegeAdvantage is here to help you with whatever dreams you have for your children’s or grandchildren’s college and career training. A 529 account is the best way to save for their education after high school with significant tax advantages, flexibility of use to pay for qualified costs, which includes new qualified expenses, and thousands of different institutions where you can use an Ohio 529 account.
What is a 529 plan?
Established by IRS Section 529 of the Internal Revenue Code in 1996, a 529 account is like a Roth IRA or Roth 401k, where you contribute your after-tax dollars to different investment options within the plan. 529 plans are set up to help families save for their children’s and grandchildren’s education after high school with tax advantaged investment option growth. And saving in a 529 plan won’t harm your chances of receiving federal financial aid, unlike other savings approaches.
Tax advantages for 529 savings
With Ohio 529 CollegeAdvantage, there are three tax advantages to keep your account growing!
First, earnings in a 529 plan grow tax-free, so all investment growth will be yours to spend on your children’s future education. Compound interest — the interest earned on contributions, earnings, and interest already accumulated in the 529 account — is included in the tax-free earnings. So, the earlier you set up your Ohio 529 plan, the longer all that compound interest will accumulate in your account. Basically, it means the money you contributed can be making even more.
Second, 529 withdrawals are made tax-free when used to pay qualified higher education expenses.
Third, If you are an Ohio taxpayer, contributions to CollegeAdvantage may be deducted from your Ohio taxable income in any amount up to $4,000 per year, per beneficiary, with unlimited carry forward. This means that $4,000 per year is not a contribution cap. If you contribute more than $4,000 in a calendar year, any amounts over $4,000 may be deducted in future years with unlimited carry forward. You can still deduct in increments up to $4,000 per year, until all 529 contributions have been deducted.
If you have an Ohio College Advantage 529 account for each of your children, you can claim the deduction to your Ohio taxable income for contributions made to each beneficiary’s account. Non-account owners who are Ohio taxpayers qualify for this tax deduction when they give gifts for college directly to CollegeAdvantage accounts.
Qualified costs
There is a wide range of what you can pay for tax-free with a 529 account, showing its flexibility of use. Qualified expenses include:
- Tuition.
- Room and board, which can include rent for off-campus residency and groceries (non-taxable items), provided these costs are equal or less than the same room and board allowances as the school.
- Mandatory fees.
- Computer equipment and related technology as well as internet services.
- Books, supplies, and equipment related to enrollment and class schedule.
- Certain apprenticeships costs — fees, textbooks, supplies, and equipment, including required trade tools. The apprenticeship must be registered.
- Federal student loan payments. There is a $10,000 lifetime limit per 529 beneficiary. However, an additional $10,000 can be used to repay qualified student loans for each of the beneficiary’s siblings.
- K-12 expenses up to $20,000 per student, per year, for enrollment at public, private, or religious elementary or secondary school. If there are multiple accounts for a student, the combined 529 distributions to pay for their K-12 expenses is limited to $20,000 per year. Consult your qualified tax advisor for specific information. The expended qualified expenses include:
- Curriculum and curricular materials;
- Books or other instructional materials;
- Online educational materials;
- Tuition for tutoring or educational classes outside of the home:
- Only if the tutor or instructor is not related to the student and is licensed as a teacher in any state, has taught at an eligible educational institution, or is a subject matter expert in the relevant subject
- Fees for a certain nationally standardized achievement test, advanced placement exam, or college admission exam (e.g. SAT, ACT) tests;
- Fees for dual enrollment in an institution of higher education; and
- Certain educational therapies for students with disabilities (e.g. occupational, behavioral, speech-language).
- Qualified Postsecondary Credentialing Expenses: Certain expenses in connection with obtaining and maintaining a postsecondary credential are considered qualified higher education expenses, not subject to federal income tax. These expenses include:
- tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary in a recognized postsecondary credential program, or any other expense incurred in connection with enrollment in or attendance at a recognized postsecondary credential program if such expense would, if incurred in connection with enrollment or attendance at an eligible educational institution, be considered a qualified higher education expense as defined in the Code;
- fees for testing if such testing is required to obtain or maintain a recognized postsecondary credential, and;
- fees for continuing education if such education is required to maintain a recognized postsecondary credential.
Please read more on what is considered a Recognized Postsecondary Credential Program.
- Roll over Ohio 529 funds to a Roth IRA for the same 529 beneficiary without incurring any penalty on the earnings. Certain criteria must be met to use the Roth IRA rollover.
Save in Ohio 529, use it nationwide
While you’re saving with Ohio 529 CollegeAdvantage, you can use your funds at both Ohio schools and schools nationwide. Ohio 529 is here to help you pay for their college and career training. You can use your Ohio 529 account across the United States at over 30,000 post-secondary institutions, which included four-year universities and colleges, two-year community colleges, trade or vocational schools, apprenticeships approved by the U.S. Labor Department, and certificate programs nationwide that accepts federal financial aid. If the school that your child wants to attend has a Federal School Code on the Free Application for Federal Student Aid (FAFSA), then you can use your Ohio 529 plan there tax-free.
The bottom-line benefit of Ohio 529? It’s far cheaper to save money and earn interest in an Ohio 529 account now versus paying off student loans with accumulated interest later. With all the tax benefits offered with Ohio 529, your account can grow to reach your savings goal. Ready to start saving? Learn, plan, and start for as little as $25 today at CollegeAdvantage.
This article was originally posted in December 2024 and has been updated to reflect current information for 2026.
