So far, more than 20 states permit K-12 tuition to be a “qualified educational expense,” reflecting the federal law.
These include Alaska, Arkansas, Delaware, Georgia, Idaho, Kansas, Kentucky, Maryland, Massachusetts, Mississippi, Missouri, Nevada, New Jersey, North Dakota, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, West Virginia and Wisconsin, according to Savingforcollege.com.
States where residents may see penalties and clawbacks of tax benefits for using their funds on K-12 costs include Iowa, New York, Oregon and Vermont.
Nebraska doesn’t yet permit its plans to be used for elementary and middle school costs, but the state treasurer’s office is working with state legislators to have the statutes reflect what’s in federal law.
Until lawmakers in that state adopt these changes, accountholders who use their funds for K-12 tuition will face the recapture of their tax deductions.
A number of other jurisdictions have yet to announce whether they will maintain their state statutes or change them to reflect federal law.
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