Big changes are coming to 529 education savings plans as they expand to K–12, career training, and more.
For years, 529 plans have been a popular way to save for college with tax-free growth. But under the “One Big Beautiful Bill,” these plans are being radically expanded to support a much broader range of education and workforce goals.
Starting in July 2025, 529s will no longer be just for college—they’ll become a powerful tool for families, adult learners, and career changers alike.
K–12 Expenses: More Coverage, Higher Limits
Until now, 529 plans could be used for K–12 tuition only, and withdrawals were limited, but now:
· Eligible expenses now include:
o Curriculum materials (books, workbooks, digital tools)
o Tutoring services
o Online subscriptions
o Educational therapies (for students with disabilities)
o Standardized test fees (SAT, ACT, AP)
o Dual enrollment and college courses taken in high school
· Annual K–12 withdrawal cap doubles:
o From $10,000 to $20,000 per student, starting in 2026
This gives parents far more flexibility to support personalized or alternative education paths.
areer Training, Licensing & Skilled Trades
The new law allows 529 funds to cover a much broader range of adult education and career development programs:
· Vocational and trade school programs
· CDL training, HVAC and electrician certification
· CPA, bar exam, cosmetology licenses
· Exam prep and continuing education
· Apprenticeships and credentialing programs
Eligibility Requirements:
Programs must be recognized by state or federal authorities (e.g., the Workforce Innovation and Opportunity Act or WEAMS).
This is a major win for nontraditional learners and adults changing careers later in life.
Postsecondary & Continuing Ed Flexibility
Beyond traditional college, 529 plans will now support:
· Community colleges
· Non-degree certificate programs
· Online learning platforms (if accredited)
· Adult education and reskilling programs
This reflects a growing understanding that higher education doesn’t look the same for everyone—and the tax code is finally catching up.
Additional Flexibility: Repay Loans & Transfer Accounts
529s now offer even more options for unused funds or shifting priorities:
· Student Loan Repayment: Still allowed, subject to existing limits.
· 529-to-ABLE Rollover: Now permanently allowed for beneficiaries with disabilities.
· 529-to-Roth IRA Rollover: Up to $35,000 of unused 529 funds can be rolled into a Roth IRA for the beneficiary (with restrictions).
Timeline: When Do These Changes Begin?
· New K–12 and career-training expense rules apply starting July 4, 2025
· The higher $20,000 K–12 cap begins in tax year 2026
These changes turn the 529 from a “college-only” tool into a lifelong learning fund. Whether your child is in private school, your teen wants to take dual enrollment courses, or you're switching careers at age 40, your 529 can now help fund the journey—tax-free.
Coming Next in the Series…
In Blog 5, we’ll look at what’s changing in healthcare, Medicaid, and Medicare—and who may be at risk of losing coverage
These changes open up huge planning opportunities for families and individuals. If you’d like help adjusting your education savings strategy, reach out—I’d be happy to walk you through your options. Click here to schedule a brief phone or zoom chat: https://calendly.com/tarlovfinancial/expedited-meeting-time
Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer's official statement and should be read carefully before investing.
Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investment in any state's 529 Plan.