In summer 2025, Congress passed the Big Beautiful Bill, which essentially revamped the country’s budget for 2025 and beyond. It has far-reaching implications regarding taxation, as well as for the funding of various federal agencies and programs. Not surprisingly, there are big impacts—some may say beautiful impacts—regarding 529 Education Savings Plans that have fundamentally improved the landscape for education savings.
We believe that 529 Plans continue to be an excellent vehicle to save for future education needs, thanks largely to the fact that investments inside a 529 Plan account can grow tax-free. The compounding nature of that growth can really add up. And now, 529 Plan accounts are poised to be more flexible and useful than ever.
More Help for K – 12
Helping with the high cost of college is one obvious way to use 529 Plans. But remember, funds in these accounts can also be used long before college. The new legislation expands how parents can use 529 Plans for students in kindergarten through 12th grade. Not only is tuition covered, but qualified uses now include books, materials, testing fees and tutoring. In fact, 529 Plans can even help parents pay for the potential added costs faced by kids with special needs. Additionally, on January 1, 2026, the limit for all K-12 expenses will double to $20,000 per year from $10,000.
Trade Schools and Beyond
The new legislation also makes 529 Plan accounts even more flexible by increasing the ways that they can be used to help pay for credentialing programs and a wide array of vocational schools, such as plumbing, electrical work, healthcare tech, dental hygiene and much more. There are many fulfilling career paths that young people can pursue outside of college, and vocational training can even facilitate mid-career changes. Naturally, credentialing programs must meet certain criteria, such as being recognized under Workforce Innovation and Opportunity Act (WIOA), the Department of Veteran Affairs WEAMS database, or otherwise approved by federal or state government programs. Be sure to confirm that your program qualifies for 529 Plan usage.
Rollovers to ABLEnow
Another key provision of the new budget legislation makes permanent the ability to roll-over funds from 529 Plans to ABLEnow accounts, which are tax-advantaged accounts created to assist people with disabilities. Transferring funds from a 529 account to an ABLEnow account (that benefits a “Member of the Family” according to IRS provisions) provides added flexibility to use these funds to help families pay for qualified disability expenses. As always, be sure to check the limitations and all the details regarding transfers of 529 Plan funds to ABLEnow accounts.
529 Plans can be an excellent saving vehicle to help pay for a wide array of education needs, and the new legislation is only making these accounts more powerful and more flexible. Remember, there’s no expiration date, so funds you have set aside in a 529 Plan can be used at a future date for qualified education purposes. The funds are also transferable from one qualified beneficiary to another. And other recent legislation paved the way to roll-over any unused 529 assets into the account beneficiary's Roth IRA, without incurring a penalty for “non-qualified” withdrawals.
Learn more about the Victory Capital 529 Education Savings Plan.
