On July 4, 2025, H.R. 1 (Big Beautiful Bill Act) was signed into law. The bill includes new key provisions that benefit 529 plans and further expand their flexibility.
Effective immediately*
- K-12 qualified expenses are expanded to cover curriculum materials, books, online educational materials, tutoring, standardized test fees, dual enrollment fees, therapies for students with special needs, and more.
- Certain postsecondary credentialing expenses are now considered qualified expenses. These include:
- tuition, fees, books, supplies, and equipment required for the enrollment and attendance of a credentialing program
- required continuing education (CE) fees, workforce training programs, preparation and exam fees for industry-recognized licenses or certifications, and more
Effective January 1, 2026*
- The annual distribution limit for K-12 expenses will increase from $10,000 to $20,000 per beneficiary.
529 plan or Trump Account: Which is the right choice for me?
The OBBBA has introduced the Trump Account, a new type of savings vehicle that allows for contributions up to $5,000 per year on an after-tax basis.
While Trump Accounts offer flexibility in how they can be used (for retirement, first-time home purchase, and education savings), there are also some disadvantages: investment options are limited and earnings are taxable upon withdrawal.
Because of these limitations, we continue to view 529 accounts as the best option for education savings and beyond, with the continued expanded flexibility these programs offer.
There are many options available to help you save for higher education expenses. Your financial professional can help you sort through the choices to come up with the best decision for your needs and budget. Consult your tax professional for tax-related advice.
Below is a table that compares the features of the Trump Account with the 529 account.
* State tax treatment of withdrawals for K-12 expenses and postsecondary credential programs is determined by the state where you file state income tax. Consult with a tax advisor before withdrawing funds for any such expenses.