Are withdrawals from a 529 plan exempt from federal income tax? A Are withdrawals from a 529 plan exempt from federal income tax? A. As long as the withdrawal is used to pay “qualified higher education expenses”, it is exempt from federal income tax.By sileo-admin|2021-02-18T11:10:21-08:00September 14, 2020|Comments Off on Are withdrawals from a 529 plan exempt from federal income tax?