ALEC Report Details State Variations in 529 Education Savings Plans

The American Legislative Exchange Council released a report examining state 529 education savings plan laws across various states, including Delaware and Indiana. The report found that 11 states—California, Colorado, Delaware, Hawaii, Illinois, Michigan, Minnesota, Nebraska, New York, Oregon, and Vermont—do not permit 529 funds to cover K-12 expenses under their state rules. Furthermore, Indiana and Montana allow K-12 tuition expenses up to $20,000 annually, while Arkansas, Kentucky, and Louisiana limit coverage to $10,000 annually.

The report highlights differences between federal rules and state policies governing qualified education expenses, potentially exposing families in 16 states to state taxes and penalties for using 529 plans. As of the end of 2025, 529 plans held $161.3 billion across 4.7 million accounts in the U.S.