Twenty thousand dollars a year is the new federal ceiling on what a 529 plan can pay out, tax free, for one child's K-12 education, and for the first time the list of things it can pay for includes curriculum, books, tutoring, test fees, and dual enrollment. Before July 4, 2025, the only K-12 expense a 529 covered was tuition at a school, capped at $10,000. The One Big Beautiful Bill Act (Public Law 119-21, section 70413) rewrote the list and doubled the cap.
For a homeschool family with money sitting in a 529, that reads like an open door. Two things stand in it. The statute still ties the expenses to a "school," and your state tax agency may not have followed Washington. Those two questions decide whether a withdrawal for your math curriculum is clean or a mistake you find at filing time, and both are worth settling before December 31.
What a 529 is, in one paragraph
A 529 plan is a state-sponsored investment account for education. You contribute after-tax dollars, the money grows without federal tax, and withdrawals come out tax free when they pay for qualified education expenses in the same year. Most states add a deduction or credit for contributions to their own plan; the federal government adds nothing on the way in. The catch sits in the word "qualified." Spend on something outside the list and the IRS taxes the earnings portion of the withdrawal as income and adds a 10 percent penalty. If you are still deciding whether a 529 belongs in your plan at all, our guide to how much homeschooling costs shows where the money goes in a typical year.
What the law changed
The law made two changes, with two different start dates.
First, the expense list. For distributions after July 4, 2025, section 529(c)(7) of the tax code counts these K-12 expenses as qualified:
- Tuition.
- Curriculum and curricular materials.
- Books or other instructional materials.
- Online educational materials.
- Tuition for tutoring or educational classes outside the home, including at a tutoring facility, provided the tutor is not related to the student and is a licensed teacher, has taught at an eligible educational institution, or is a subject matter expert.
- Fees for a nationally standardized norm-referenced achievement test, an AP exam, or any exam related to college admission.
- Fees for dual enrollment at a college or university.
- Educational therapies for students with disabilities from a licensed or accredited practitioner, including occupational, behavioral, physical, and speech-language therapy.
Second, the cap. For tax years beginning after December 31, 2025, the annual K-12 limit is $20,000 per beneficiary, counted across all 529 accounts naming that child. For 2025 the limit stayed at $10,000. The IRS restates both on its Topic 313 page.
Until July 2025 the K-12 provision covered one thing, tuition at an elementary or secondary school, so a family with no tuition bill had no federal use for the account before college. That is why our earlier posts on whether homeschool expenses are deductible and tax credits by state told you a 529 would not help with curriculum. They were right at the time, and that is the piece this law overturned. Fees for dual enrollment, AP exams, and the SAT or ACT now sit on the list too.
Read the tutoring line twice. The tutor has to be unrelated to your student, credentialed in one of three ways, and teaching outside your home. A co-op class in a church basement with a hired instructor can fit; a tutor at your kitchen table cannot. The list also says nothing about co-op membership fees, field trips, laptops, or general supplies. Treat it as the whole list until the IRS says otherwise.
The homeschool wrinkle
The word "homeschool" is not in the statute. Each item on that list must be "in connection with enrollment or attendance at, or for students enrolled at or attending, an elementary or secondary public, private, or religious school." Congress did not define school in this section, and IRS Publication 970 points to state law to decide what counts as one.
That makes your state's homeschool statute the hinge. In Texas, Illinois, Indiana, Kansas, and a stretch of other states, a homeschool is a private or non-public school under state law, and the fit is clean. In states with a separate home instruction statute, such as Pennsylvania, New York, and Virginia, your family is not enrolled in a private school by that state's own definition, and whether the IRS would accept the withdrawal is an open question. I went looking for IRS guidance that answers it for homeschoolers and could not find any as of this writing. Senator Cruz's Student Empowerment Act would add language treating a homeschool as a private school for this purpose; it has not become law. Our state pages name the legal option each state uses.
Your state may not have followed
Federal tax free does not mean state tax free. Each state decides whether its income tax code conforms to section 529's K-12 rules, and a dozen or so do not. California is the clearest case. ScholarShare 529's own plan description says the earnings portion of a K-12 withdrawal is subject to California income tax plus an additional 2.5 percent California tax, and the federal change did not move that. A January 2026 industry tally of states that do not treat K-12 tuition as qualified also named Colorado, Connecticut, Hawaii, Illinois, Michigan, Minnesota, Montana, Nebraska, New Mexico, New York, Oregon, and Vermont.
Conformity has a second layer. A state that conforms on K-12 tuition may not yet recognize the new categories or the $20,000 cap, because many state codes reference the federal code as it stood on a fixed date. Then there is recapture: if you deducted the contribution on your state return, a withdrawal your state calls nonqualified can claw that deduction back. Your plan's current plan description spells this out. Search it for "K-12" and "2026." Californians can read our California guide knowing the private school affidavit solves the compliance question and leaves the tax question where it was.
The other education provision in the bill
The same law created a second program, and readers mix it up with the 529 change. Starting January 1, 2027, section 25F gives an individual a dollar-for-dollar federal tax credit of up to $1,700 for cash donations to an approved scholarship granting organization; a married couple filing jointly can each claim one. The organization then awards scholarships to families earning no more than 300 percent of area median income, spendable on tuition, curriculum, books, tutoring, test fees, and therapies. States must opt in. As of October 22, 2026 the IRS lists 30 that have, with Texas, Florida, Ohio, Tennessee, and Indiana among them and California, New York, and Illinois absent. Treasury published proposed regulations on October 1, 2026.
The 529 change lets you spend your own saved money on homeschool costs now. The scholarship credit lets a donor fund someone else's scholarship beginning in 2027, and whether a homeschool family can receive one depends on the state's rules for its scholarship organizations. We covered that credit in detail in our Education Freedom Tax Credit post. If you also take state money, read how ESAs work in each state; an ESA and a 529 can pay for the same curriculum, and one receipt cannot serve both.
What to do before December 31
Check conformity, twice. Does your state treat your homeschool as a private school, and does your state income tax conform to the 2025 federal changes? The first answer is on your state's homeschool page; the second is in your plan description or a call to the plan. Two yeses and you are clear. One no and the federal benefit may still be worth taking, since the state hit falls on earnings only, but run the numbers first.
Match the year. The withdrawal and the expense have to land in the same calendar year. If you bought curriculum in August 2026 and paid out of pocket, you can reimburse yourself from the 529 now; wait until January and the match is gone. Add up what you paid this year that fits the eight categories and keep the total under $20,000 per child across all accounts.
Keep receipts the way you keep attendance. The plan sends a Form 1099-Q to whoever received the money, and the IRS gets no itemized list. You hold the proof. For each receipt note the child, the course, and, for tutoring, the instructor's credential. Our record-keeping guide covers the attendance side, and the receipt discipline we describe for ESA audits serves here unchanged. In Homeschool Fox, log the course the receipt belongs to alongside the hours and tag the core subjects, so the receipts and the hours line up.
Before the week is out, open your plan description, search for "K-12," and pull up your state's page. If both come back clean, list what you paid in 2026 and reimburse yourself before the year closes. If either comes back muddy, leave the money for college. The account did that job before July 2025 and still does.
