Ohio 529 Pays Qualified College, Career, K-12 Costs Tax-Free

Saving for your child or grandchild’s future college and career training is forward-thinking and a from-the-heart act to show that you believe in them.  An Ohio 529 CollegeAdvantage account can help you fund that future, whether it’s here in the great State of Ohio, or nationwide.  

One huge benefit of saving in an Ohio 529 account is its ability to pay for your children’s or grandchildren’s qualified higher education expenses tax-free. And it’s not a small list either; it includes many of the required costs for attending a four-year college or university, community college, trade/vocational/technical school, apprenticeship verified by the U.S. Department of Labor, certificate or credential programs, and graduate school.

The qualified distributions that can be paid tax-free with a 529 include many higher education expenses, and related costs, such as:

• tuition;
• room and board during any academic period in which the 529 beneficiary is enrolled for at least half of the full-time academic workload according to the eligible education institution. Room and board costs can also include rent for off-campus residency —including apartment, homes, and Greek fraternities and sororities houses — and groceries (non-taxable items only), provided these costs are equal or less than the same room and board allowances from the accredited education institution;
• mandatory fees;
• computer equipment and related technology as well as internet services;
• books, supplies and equipment related to enrollment and class schedule;
• certain expenses for a special-needs student;
• qualified apprenticeships costs such as fees, textbooks, supplies, and equipment like required trade tools. The apprenticeship program must be registered with the Secretary of Labor’s National Apprenticeships Act to use a 529 plan withdrawal. Interested parties can check the U.S. Labor Department’s search tool to confirm that a program is registered, and therefore, eligible for a 529 withdrawal;
• Up to $20,000 per child, per year, from a 529 account can be used to pay for K-12 qualified expenses at a public, private, or religious elementary or secondary school. If your child has more than one 529 plan, then the combined qualified distributions from all the 529 accounts for K-12 tuition is limited to $20,000 a year. Consult your qualified tax advisor for specific information These qualified expenses are:
  • 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; and
  • Certain educational therapies for students with disabilities (e.g. occupational, behavioral, speech-language).
    • Certain expenses in connection with obtaining and maintaining a postsecondary credential are considered qualified higher education expenses, and are not subject to federal income tax. These expenses include:

      (i) 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; 

      (ii)  fees for testing if such testing is required to obtain or maintain a recognized postsecondary credential, and;

      (iii) fees for continuing education if such education is required to maintain a recognized postsecondary credential.

      • Defined as a program that:

        (i) is on a state list prepared under section 122(d) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3152(d)); 

        (ii) is listed in the public directory of the Web Enabled Approval Management System (WEAMS) of the Veterans Benefits Administration, or successor directory such program;

        (iii) provides training or education which prepares individuals to take an examination (developed or administered by an organization widely recognized as providing reputable credentials in the occupation and the organization recognizes such program as providing training or education which prepares individuals) that is required to obtain or maintain such credential, or;

        (iv) identified by the Secretary of the Treasury, after consultation with the Secretary of Labor, as being a reputable program for obtaining a recognized postsecondary credential.

      • Recognized Postsecondary Credential: Defined as:

        (i) any postsecondary employment credential that is industry recognized and is: (a) issued by a program that is accredited by the Institute for Credentialing Excellence, the National Commission on Certifying Agencies, or the American National Standards Institute; (b) included in the Credentialing Opportunities On-Line (COOL) directory of credentialing programs (or successor directory) maintained by the Department of Defense or by any branch of the Armed Forces; or (c) identified by the Secretary of the Treasury after consultation with the Secretary of Labor, as being industry recognized;

        (ii) any certificate of completion of an apprenticeship that is registered and certified with the Secretary of Labor under the Act of August 16, 1937 (commonly known as the ‘National Apprenticeship Act’; 50 Stat. 664, chapter 663; 29 U.S.C. 50 et seq.);

        (iii) any occupational or professional license issued or recognized by a state or the federal government (and any certification that satisfies a condition for obtaining such a license); and

        (iv) any recognized postsecondary credential as defined in section 3(52) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102(52)), provided through a program included on a state list prepared under section 12(d) of the Workforce Innovation and Opportunity Act (29 U.S.C. 3152(d)).

• A tax-free 529 withdrawal can be used to pay principal and interest on certain qualified education loans for the beneficiary of your account or any of the beneficiary’s siblings. The loan repayment provisions apply to repayments up to $10,000 per individual. This $10,000 is a lifetime amount, not an annual limit. Withdrawals for student loan repayment can only be made to the 529 account owner or the beneficiary of the 529 account.

• Unused 529 funds (subject to the requirements listed below) to roll over to a Roth IRA for the same 529 beneficiary without incurring any penalty on the earnings. There are some requirements to use this new qualified distribution. First, a 529 account must be open for the beneficiary for 15 years. Second, the Roth IRA must be for the same beneficiary of the 529 account. Third, your contribution, also called the principal, must have been in your Ohio 529 account for at least five years before the Roth IRA rollover. Fourth, you can only roll over 529 funds up to the yearly Roth IRA contribution limit, which is $7,500 in 2026. Fifth, the lifetime maximum 529 amount allowed for the Roth IRA rollover is $35,000. There are still many clarifications and operational issues that will need to be resolved relating to this recent change. 

So, as you see, you can pay tax-free for many qualified higher education costs at many higher education institutions with your Ohio 529 account.

Along with the tax-free withdrawals, there are two other tax advantages of saving with Ohio 529 CollegeAdvantage.

First all earnings grow tax-free, meaning that all the investment growth is yours to use for your children’s future educational expenses. Compound interest — the interest earned on contributions, earnings, and interest already accumulated in the 529 account — is included in the tax-free earnings. To see just how tax-free growth adds up with a 529 savings plan, use the tax benefit tool to see the difference between a 529 plan account and a taxable savings account.

The other tax benefit is that any Ohio resident — whether the account owner or a gift giver — who contributes to an Ohio 529 account can deduct their contributions from their taxable state income. The deduction is $4,000 per year, per beneficiary, with unlimited carry forward, which means that the $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all Ohio 529 Plan contributions have been deducted.

Since 1989, Ohio 529 has been helping families across the nation save for their children’s education after high school. Ohio 529 covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, and certificate or credential program nationwide that accepts federal financial aid. Learn, plan, and start for as little as $25 today at CollegeAdvantage.