New 529 Plan Rules Expand Education Benefits

A 529 plan, also known as a qualified tuition plan (QTP), has long provided powerful, tax-advantaged ways to save for education expenses—for children, grandchildren, and even yourself.

While contributions to college savings accounts are not federally tax-deductible, the money grows tax-free, and withdrawals remain tax-free when used for qualified education expenses. Thanks to the recently enacted One Big Beautiful Bill Act (OBBBA), the benefits of 529 plans are now broader than ever.

Expanded 529 Plan Uses for Education and Career Training

Historically, families used college savings plan funds primarily for college costs, with up to $10,000 per year allowed for K–12 tuition.

Beginning July 5, 2025, the OBBBA expands what qualifies as an eligible expense under a 529 plan. You’ll be able to use funds to cover a wide range of post-secondary credentialing and continuing education expenses. This includes costs for:

• Professional and occupational licenses
• Career certificates and credentials from universities, community colleges, trade schools, and technical schools
• Continuing education courses for professionals who already hold a degree or certification

Examples of qualified 529 plan expenses now include:

• State licensing fees for barbers or hairstylists
• Continuing education credits for medical professionals
• Tools required for a welding certificate program

With these updates, the 529 plan has evolved beyond a college savings account into a flexible tool for lifelong learning and career advancement.

Who Can Open and Benefit from a 529 Plan?

Although most people associate a 529 plan with saving for a child’s college education, adults can also benefit. You can open a 529 plan for yourself or your spouse to fund continuing education, certification programs, or professional development.

Additional 529 Plan Benefits:

• There is no time limit on using the funds.
• You may transfer the account to another eligible family member at any time.
• You can roll over up to $35,000 from a 529 plan into a Roth IRA, under certain conditions—providing an excellent long-term tax strategy.

Enhanced K-12 Education Benefits in 529 Plans

Under the OBBBA, 529 plans now offer even more tax-free benefits for K–12 education expenses. In addition to tuition, you may use your 529 plan funds for:

• Books and online educational materials
• Tutoring services
• Standardized testing fees (e.g., SAT, ACT)
• Educational therapy for students with disabilities

And beginning in 2026, the annual tax-free withdrawal limit for K–12 expenses will double to $20,000.

Should You Consider a 529 Plan? 

Whether you’re saving for a child’s college education or planning to advance your own career, a 529 plan offers unmatched flexibility, tax advantages, and peace of mind. With the recent changes, these plans are more useful than ever—for all stages of education.

Next Steps

Interested in learning how a 529 plan fits into your financial and tax strategy? Contact the team at TrueBlaze with questions you may have.

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