If you’ve ever considered saving for education expenses, you’ve probably heard about Section 529 plans. These plans have long been a tax-advantaged way to save for tuition and education costs. They’re popular with parents, grandparents, and even adults investing in their own education.
Now, thanks to the One Big Beautiful Bill Act (OBBBA), Section 529 plans are more flexible than ever. The law expands what these funds can cover—and the changes could benefit you or someone in your family as early as this year.
Let’s break down what’s new for 529 plans in 2025, how these changes work, and why you should take another look at them.
What Is a Section 529 Plan?
Section 529 plans—also called qualified tuition plans—were introduced in 1996 to help families save for education. Every state offers a plan, and you can choose any state’s plan, not just your own.
Here’s the basics:
- You open a 529 account for a beneficiary (often your child or grandchild, but it could also be yourself).
- Contributions aren’t federally tax-deductible, though many states offer tax benefits.
- The money grows tax-free, and withdrawals for qualified education expenses are also tax-free.
For years, these qualified expenses were limited to college tuition, books, and housing. Today, the possibilities are much greater.
Tax Benefits and Contribution Rules
529 plans are attractive because of their tax-free growth. Unlike other investment accounts, you won’t owe taxes on earnings if you use the money for eligible education costs.
There’s no federal contribution cap, but states set their own limits, typically between $235,000 and $597,000 per beneficiary. If you hit the cap in one state, you can open an account in another.
Contributions count as gifts, so the annual gift tax exclusion applies: $19,000 per person in 2025, or $38,000 for couples who split gifts. You can even “superfund” your account by contributing five years’ worth in advance—up to $95,000 per person or $190,000 per couple—without filing a gift tax return.
What’s New: OBBBA Expands 529 Flexibility
The most common worry about 529 plans has been: “What if my child doesn’t go to college?” OBBBA changes that by making 529 plans much more versatile.
As of July 5, 2025, 529 funds can be used for far more than traditional college expenses. You can now cover professional credentials, vocational programs, and continuing education—a game-changer for families and individuals planning for lifelong learning.
529 Plans for Professional Credentials and Career Training
Previously, 529 funds were mainly for college. Now, they can pay for post-secondary credentialing programs that help people start, maintain, or advance their careers.
These eligible expenses include:
- Professional licenses and certifications (CPA exam, bar exam, real estate license, CDL)
- Training under the Workforce Innovation and Opportunity Act (WIOA) for fields like health care, manufacturing, IT, and skilled trades
- Continuing education courses to maintain professional credentials for lawyers, CPAs, doctors, teachers, and more
- Registered apprenticeship programs approved by the U.S. Department of Labor
- Military-approved credentialing programs in COOL and WEAMS databases
This means a 529 plan isn’t just for college students—it’s a tool for career growth and professional development at any age.
What Expenses Are Covered?
If you’re using a 529 for credentialing or training, you can now pay for:
- Tuition and program fees
- Books and supplies
- Equipment and technology (including computers and software)
- Internet access for coursework
- Exam fees for certifications and renewals
- Continuing education courses tied to a credential
These updates make 529 plans one of the most flexible education savings tools ever created.
More Options for K–12 Education
Before OBBBA, 529 plans allowed up to $10,000 per year for K–12 tuition. Now, that benefit is expanding. Starting in 2026, the annual limit doubles to $20,000.
And it’s not just tuition anymore. 529 funds can now cover:
- Books and instructional materials
- Online learning resources
- Tutoring by licensed teachers
- Standardized test fees (SAT, ACT, AP exams)
- Educational therapy for students with disabilities
Families can now use 529 plans to supplement public education or offset private school costs without dipping into college savings.
No Expiration and New Rollover Option
One of the best features of 529 plans is flexibility. There’s no deadline to use the funds. If your child doesn’t need the money, you can:
- Transfer it to another beneficiary
- Use it for your own professional development
- Roll over up to $35,000 to a Roth IRA under certain conditions
This makes a 529 plan a lifelong asset, not just a college fund.
Why These Changes Matter
OBBBA has turned 529 plans from college-only accounts into comprehensive education and career savings plans. They now support:
- Higher education costs (tuition, books, housing)
- Professional licensing and certifications
- Continuing education for career growth
- K–12 educational support
In short, they’re more useful than ever.
What Should You Do Next?
If you’ve avoided opening a 529 because you worried the money would be “trapped” in college expenses, those days are over. With these new rules, a 529 plan can:
- Fund your child’s education
- Cover career training for you or your spouse
- Pay for continuing education that keeps your credentials active
The OBBBA updates make 529 plans one of the smartest financial tools for lifelong learning.
Key Takeaways
- Starting July 5, 2025, 529 plans can pay for professional credentials, licenses, and continuing education—not just college tuition.
- The K–12 annual withdrawal limit doubles to $20,000 in 2026, and new expenses like tutoring and test prep are covered.
- You can transfer funds to another beneficiary or roll over $35,000 into a Roth IRA for retirement savings.
Ready to Take Advantage of These Changes?
Now is the perfect time to review your education savings strategy. Whether you want to plan for your child’s future, fund your own professional development, or keep options open for the whole family, a 529 plan offers unmatched flexibility and tax benefits.
Contact us today to learn how these new 529 rules can fit into your financial plan. We’ll help you choose the best strategy, so you get the most from your education savings.
