529 Plan Changes in 2025: Expanded Qualified Expenses Under the OBBBA

The One Big Beautiful Bill Act (OBBBA) makes important changes to how families can use 529 education savings plans, broadening their scope well beyond traditional college tuition. Families now have greater flexibility to apply these accounts toward elementary and secondary education, homeschooling, and career-focused programs after high school. 

Broader Qualified Expenses for K–12 Education 

Previously, 529 withdrawals for K–12 education were capped at $10,000 per year per beneficiary, and those funds could be used only for tuition at public, private, or religious schools. Other school-related expenses – such as curriculum, books, tutoring, or online materials – did not qualify. Homeschooling was also excluded under the 2017 Tax Cuts and Jobs Act (TCJA). 

Beginning July 4, 2025, the rules expand considerably. Families may use 529 funds for a much wider range of qualified expenses, including instructional materials, tutoring, online coursework, dual enrollment fees, standardized test costs, and educational therapies for students with disabilities. For tax years beginning after December 31, 2025, the annual cap will also double to $20,000 per beneficiary. 

These changes mean 529 plans can now cover not just tuition, but a fuller picture of the real costs families face during the school years – including homeschooling. To get the most benefit, families should align withdrawals with expenses paid in the same tax year and coordinate with other education-related tax credits, such as the American Opportunity Tax Credit, to avoid overlap. 

Expanded Use for Credentialing and Career Programs 

The OBBBA also expands the use of 529 funds beyond colleges and universities. Beginning July 4, 2025, tax-free distributions may be applied to postsecondary credentialing programs, including certificate programs, licensing requirements, and apprenticeships. Tuition, fees, books, supplies, and equipment for these programs are all covered, including programs outside of the traditional degree track. 

Implications for Families 

These changes reshape 529 accounts into more comprehensive education savings tools. Parents of younger children can use them for tutoring, dual enrollment, or homeschooling expenses, while older students may use them for professional certifications or career training. The result is greater flexibility in aligning long-term education savings with the varied paths students take today. 

With these expanded rules, families have new opportunities to make the most of their education savings. By coordinating 529 withdrawals with other education-related tax benefits and keeping the effective dates in mind, they can maximize tax advantages and ensure their funds go further in supporting a wide range of education goals.