529 plans are designed to support families saving for future education expenses. Earnings on contributions are not subject to federal taxes when they are eventually withdrawn to pay for schooling and schooling-related expenses.
In our recent wave of tax changes, the definition of “qualified education expenses” has expanded, which can be great news for savers. In the past, this was a tool that was for higher education only.
Now, a 529 plan allows up to $10,000 in tax-advantaged withdrawals per year, per beneficiary, for qualified elementary or secondary public, private, or religious school. (This does differ by state and it also excludes home schooling.) See other benefits of 529 plans, including how they can be used as an estate planning tool, free of federal gift tax, here.