Good News: Potential Tax-Savings Benefit for MMA Families

You May Be Able to Pay for Mid-Metro Academy Courses from Your Section 529 Qualified Tuition Program Plan

Thanks to the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, you may now be able to use 529 savings plan funds to cover the cost of MMA’s à la carte classes for your homeschooled students in grades 5-12. The OBBBA expands federal 529 plan rules to allow up to $20,000 per year for K-12 expenses, including tuition for educational classes outside the home and curriculum materials. For qualifying classes at MMA (“educational classes” taught by unrelated instructors and delivered outside your home), class tuition, fees, and textbooks may be eligible for tax-free withdrawals from a 529 plan at the federal income tax level. That means you could potentially save federal income taxes that you would otherwise pay on your earnings. Although the federal law has changed to allow K-12 expenses, Minnesota still does not recognize K-12 expenses as qualified for state tax purposes; that means withdrawals for MMA tuition may incur state taxes and a 10% penalty on earnings. On the other hand, Minnesota’s K-12 education subtraction (up to $1,625 per child for grades 7-12) can offset some costs by allowing a state tax deduction for class tuition.

To take advantage of this opportunity, families should consult a tax professional or accountant to confirm that MMA’s class fees qualify as 529 expenses under federal law and to understand Minnesota’s tax implications, including potential penalties and deduction recapture. To help justify 529 withdrawals, print and retain your MMA invoices, which specify “tuition” and the names of the educational classes. We recommend contacting the Home School Legal Defense Association (HSLDA) or the Minnesota College Savings Plan (www.mnsaves.org) (www.mnsaves.org) for guidance. While the federal tax savings can make 529 plans appealing, the added complexity of state taxes and penalties requires careful planning to ensure this strategy works for your family.

Disclaimer: Mid-Metro Academy is not a financial or legal advisor. Please consult a tax professional or attorney before using 529 funds.