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Back to School Savings Tips with AZ529 Education Savings Plans
By Hon. Kimberly Yee, Treasurer of Arizona
Back to School means it’s time to focus on what's ahead for your child's future and create a successful pathway towards their higher education and career dreams. As the Treasurer of Arizona, I help expand opportunities for all Arizona families to access higher education, including traditional college, vocational training, and apprenticeships. Additionally, as a mom of two young boys, I understand that back-to-school supplies and clothing can be expensive for Arizona families. However, careful financial planning and strategic use of your AZ529 can minimize the financial impact while still allowing you to plan for your child’s future. Here are a few tips if families are feeling overwhelmed with back-to-school expenses:
1. First, families should set a budget/timeline. Know how much you can safely spend, and then as a family, prioritize needs vs. wants, as well as what needs to be purchased at the beginning of the year, and what can wait a few weeks to find better deals.
2. Shop summer and back-to-school sales – Watch for end-of-summer and back-to-school sales to score the best deals on your list of needs. Prioritize big-ticket items such as backpacks, shoes, and electronics during these sales to maximize savings.
3. Swap uniforms or visit thrift stores: Some schools offer uniform swaps or uniform centers where families can swap uniforms for different sizes. To also save on clothes and uniforms, families can consider visiting their local thrift shop.
4. Look for student discounts: Many retailers offer discounts for students. Be sure to ask before you pay full price.
5. Consider using 529 funds for K-12 tuition or tutoring services: While 529 plans are primarily for post-secondary education savings, you can withdraw up to $10,000 per year per student for K-12 tuition at private, public, religious schools, and even tutoring services. This number will increase to $20,000 in 2026 thanks to recent federal legislation. This can create big savings in back-to-school budgets.
What is the AZ529 Education Savings Plan? The AZ529, Arizona’s Education Savings Plan is a tax-advantaged investment plan designed to help families save for a child’s future education expenses. Savings in an AZ529 plan are free from federal income tax, and withdrawals remain tax-free when used for qualified education expenses. Contributions to the AZ529 plan can be deducted from Arizona state income taxes up to $4,000 per beneficiary for a married couple filing jointly or up to $2,000 per beneficiary for single filers.
How can the funds be used? AZ529 savings can be used to pay for a variety of higher education expenses, including tuition, fees, room, board, books, supplies, and even internet access. AZ529 funds may be used at accredited public and private colleges, universities, community colleges, technical training schools, and apprenticeship programs. Additionally, AZ529 savings can be used on school tuition for private and religious K-12 educational institutions.
What if the child doesn’t go to college or use all their 529 money? If a child doesn’t go to college or vocational school or doesn’t use all the money saved in an AZ529 plan, there is great news. The law allows families the option of transferring qualified “leftover” 529 funds, of up to $35,000, into the account beneficiary’s Roth IRA retirement fund, free of any tax, penalty, or applicable income limits.
Smart financial choices, budgeting, and planning during the back-to-school season can ensure children and grandchildren will achieve an education while securing the financial freedom they deserve. Remember, it is never too early and certainly never too late to begin saving. Learn more at AZ529.gov
The Honorable Kimberly Yee is the Treasurer of Arizona. When she took office, she asked for the AZ529 Education Savings Plan to be placed under her administration. In a short period of time, Arizona’s 529 accounts have increased by 57,390 new accounts with $2.46 billion in AZ529 assets under management. She has reached diverse communities and families in every county of our state and increased access by translating materials into Spanish and Navajo. For more information about the AZ529 Education Savings Plan, visit az529.gov.
