Federal changes to qualified education expenses

The One Big Beautiful Bill Act (the “OBBBA”) recently passed by Congress and signed into law on July 4, 2025, has provisions that impact 529 plans.

Here’s what you need to know.

K-12 expenses

The OBBBA legislation expands the definition of qualified education expenses for K-12 beyond only tuition to also include books, materials, testing fees, dual enrollment fees, educational therapies and tutoring costs. Previously, 529 funds could only be applied to tuition expenses up to $10,000 annually.

Details are outlined below.

Account owners can begin using 529 funds for the new expenses as of July 5, 2025.

• The legislation now allows K-12 qualified education expenses for:
  • Tuition.
  • Curriculum and curricular materials.
  • Books or other instructional materials.
  • Online educational materials.
  • Tuition for tutoring or educational classes outside of the home, including at a tutoring facility. The tutor cannot be related to the student and must qualify as one of the following:
    • A licensed teacher,
    • A current or former teacher at an eligible educational institution, or
    • A subject matter expert in the relevant subject.
  • Fees for a nationally standardized achievement test, an Advanced Placement examination, or any college admissions/entrance exam (e.g., SAT, ACT, etc.).
  • Fees for dual enrollment in an institution of higher education.
  • Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical and speech-language therapies.
• The legislation applies to K-12 attendance or enrollment at a public, private or religious elementary or secondary school.
• Beginning January 1, 2026, the total limit for all K-12 expenses will rise to $20,000 per year (from $10,000).

Postsecondary credentials

529 funds can now be used on qualified postsecondary credentialing expenses if the beneficiary is enrolled in a recognized postsecondary credential program. To qualify, credential programs must be one of the following:

• Authorized by the Workforce Innovation and Opportunity Act.
• A military credential.
• Approved by the federal or state government.
• Aligned with other approved postsecondary credential organizations.

As of July 5, 2025, the law allows tuition, fees, books, supplies and equipment required for participation, as well as fees for testing or continuing education if required to obtain or maintain the credential.

Rollovers from 529 accounts to ABLE accounts

A provision allowing 529 savers to roll funds to an ABLE account for the beneficiary or a member of the family of the beneficiary was previously set to expire on December 31, 2025. However, new legislation has removed this expiration date, meaning rollovers from 529 accounts to ABLE accounts are now permitted beyond 2025.