The flexibility of using a 529 account continues to grow.
Originally, 529 accounts were solely for post-secondary higher education expenses. However, the flexibility of 529 accounts has continued to grow since their creation in 1996, as the federal government has continually expanded the list of the qualified tax-free distributions for these accounts.
In 2018, the federal government added a new tax-free 529 withdrawal distribution, which allowed families to use their 529 savings to pay up to $10,000 of their child’s K-12 tuition at a public, private, or religious elementary or secondary school. This means your education saving account with Ohio 529 CollegeAdvantage can cover certain costs for elementary, secondary, and post-secondary education.
In 2026, the limit was increased to $20,000 per child, per year, and the tuition-only mandate was removed. New tax-free 529 qualified distributions were added, including:
- Curriculum and curricular materials.
- Books or other instructional materials.
- Online educational materials.
- Tuition for tutoring or educational classes outside of the home, but 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.
- Certain educational therapies for students with disabilities (e.g. occupational, behavioral, speech-language).
These new qualifying expenses are also eligible for all the 529 tax benefits.
First, all earnings in a 529 account are tax-free. You can watch your 529 account can grow with compound interest and tax-free earnings. For Ohio 529, compound interest accumulates on the original contributions as well as any additional 529 contributions, any earnings from the 529 investment options, and any accrued interest. Every dollar saved and its growth is yours to use for qualified education expenses.
Second, all 529 withdrawals used for qualified higher education expenses are also tax-free. The addition of these K-12 qualified expenses adds to the flexibility of a 529 plan to cover many different education costs.
Third, there’s a significant tax benefit for any Ohio resident who contributes to an Ohio 529 account. Whether or not you are the 529 account owner, Ohio residents can deduct their contributions to Ohio 529 CollegeAdvantage from their taxable state income. The deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward. This also means that $4,000 is not an annual contribution cap for Ohioans. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to deduct $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions have been deducted.
And there is another advantage to saving in Ohio 529 CollegeAdvantage for your children’s K-12 expenses. Any remaining 529 funds can then be used for their education after high school, which is the original intent behind 529 plans. Your Ohio 529 account can be used starting with your child’s elementary education all the way through graduate school and potentially kick-starting their retirement savings. There are a variety of qualified uses for a 529 plan so you can continue to save in your child’s Ohio 529 account through their entire academic career and set them up for their professional career.
Since 1989, Ohio 529 CollegeAdvantage has been helping families across the nation save for their children’s college or career training. Ohio 529 covers qualified costs at any accredited four-year college or university, two-year community college, trade or vocational school, certificate or credential program nationwide that accepts federal financial aid, as well as any apprenticeship approved by the U.S. Labor Department. Learn, plan, and start for as little as $25 today at CollegeAdvantage.
