Planning to use a 529 plan for your child's private high school tuition? Not so fast.
The massive overhaul to the federal tax code redefined the education investment funds. Now, the accounts can be tapped not just for college expenses but for K-12 private school tuition, as well. That means withdrawals for either purpose are exempt from federal taxes, regardless of whether you live in Vermont or Kentucky.
Yet many states are still trying to figure out if their own tax benefits apply to savers who turn to the accounts for private elementary, middle or high school tuition bills.
If you use your 529 plan for K-12 expenses and live in a state that doesn't consider those costs as qualifying, you may have to pay state income taxes on those withdrawals. In addition, any state income deductions you claimed for making your contribution could be cancelled.