The One Big Beautiful Bill Act (OBBBA), signed into law earlier this year, brought about many significant tax law changes. One of the lesser talked about, but important provisions of OBBBA is the enhancements to 529 plan accounts. If you or someone you know has large 529 plan balances, numerous program expansions might be of interest to you.
What Has Changed with 529 Plans?
The following is an overview of the OBBBA changes to 529 plans:
- The maximum annual qualified distribution from a 529 plan for K-12 private school has increased from $10,000 to $20,000.
- This is effective beginning in 2026.
- The law expands the list of K-12 expenses eligible for tax-free distributions. It broadens the definition of “qualified education expenses” to include:
- Standardized testing (including AP tests & college admission exams)
- Tutoring outside the home
- Therapies for students with disabilities (including physical, occupational, behavioral, speech and other)
- Curriculum, books, and instructional materials
- Post-secondary coursework fees
- This expanded list is effective for any distributions taken after the OBBBA enactment (July 4, 2025).
- NOTE: Prior to this expansion, K-12 tax-free distributions were limited to tuition expenses only.
- The OBBBA includes a provision that allows 529 funds to be used for eligible post-secondary credential expenses. These could include:
- Tuition, fees, expenses for a post-secondary program
- Exam fees for obtaining the credential
- Continuing education fees for the credential
- Post-secondary credentials include:
- Industry-recognized and accredited by major credentialing organization
- Apprenticeships registered with the Department of Labor
- Occupational licenses issued or recognized by a state or the Federal government
- Other post-secondary credentials as defined under Section 3 of the Workforce Innovation and Opportunity Act.
Paying for your child’s college education is one of the largest single expenses your family may face. Given the magnitude of today’s college costs, SageVest Wealth Management believes it’s important that the investment you make in your child’s future is well-planned and spent wisely. To learn more about college savings and how we can help secure your family’s financial future, please contact us.
