Big news for education savings: The recently passed federal legislation (H.R. 1*) introduces major updates to 529 plans, giving families more ways to save and use funds for education and beyond. Here’s a clear breakdown of what changed, why it matters, and how you can make the most of it, whether you’re already saving with The Education Plan® or are considering opening a 529. 

What Is a 529 Plan?

A 529 plan is a tax-advantaged savings account designed to help families pay for qualified education expenses. Contributions grow tax-free, and withdrawals for qualified expenses, including tuition, books, and room and board, are tax-free. Bill H.R. 1 has expanded the flexibility of a 529 plan even further by expanding the definition of qualified expenses to include additional items. 

Key 529 Plan Changes 

K-12 Expenses 

One of the biggest changes the bill makes is to how the funds in a 529 account can be used for K-12 education. 

The bill increases the annual withdrawal limit for K-12 expenses from $10,000 to $20,000. This change will go into effect starting January 1st of 2026.

Alongside the increase in the amount you can withdraw for K-12 expenses, the bill expands the definition of qualified K-12 expenses. Previously, parents were only able to use 529 funds to pay for K-12 tuition. Qualified K-12 expenses now also include: 

• Curriculum, books, and other instructional materials

• Online educational resources

• Tutoring (from qualified tutors)

• Educational therapies for students with disabilities

• Dual enrollment tuition (four courses taken during high school) 

• Standardized test fees (including the SAT and ACT)

These changes make a 529 plan even more flexible for parents who want or need to use the funds before a student graduates from high school. 

Vocational Programs 

Previously, 529 plans could be used to pay for apprenticeship expenses. Because of H.R. 1, funds can now also be used for many post-secondary vocational programs that aren’t offered in a traditional college setting. Qualified expenses include tuition, as well as preparation and exam fees, and continuing education needs to maintain certifications. 

The program must meet certain requirements to be considered eligible. If you’re interested in a specific program, check the federal government’s WEAMS (Web Enabled Approval Management System) database or your state’s Workforce Innovation and Opportunity Act (WIOA) directory. You can find New Mexico’s WIOA directory here. 

These changes give students who aren’t interested in traditional 2- or 4-year college programs expanded opportunities to further their careers. 

Credentialing and Licensing

In addition to including vocational programs, the bill also allows 529 funds to be used for expenses related to professional licensing and certification programs. This can include exam fees, certification courses, required continuing education programs, and more.  

This new benefit is particularly beneficial for adult students who may be switching careers, returning to the workforce, or expanding their professional certifications. 

ABLE Accounts 

Starting in 2026, the bill will make permanent several qualified expenses related to ABLE accounts that were set to expire. This includes the ability to rollover funds from a 529 account into an ABLE account without tax penalties. 

This benefit gives families who have children with disabilities the flexibility to create the best savings strategy for their situation. 

Why These Changes Matter

Flexibility
A 529 plan has always been a flexible way to save for future education expenses. That flexibility just got even better. H.R. 1’s expansions to 529 plan rules give families greater freedom to use their funds for a wide range of educational expenses, including K-12 expenses outside of tuition.

Tax Advantages
The tax advantages of a 529 plan offer families a smart way to save for a wide range of educational needs. These advantages have stayed in place as the qualified uses of a 529 plan have expanded with the bill. 

More Career Pathways 
The expanded uses of a 529 plan focus on career pathways outside of higher education. Now, students who want alternatives to a traditional college education have even more options. 

What Should You Do Next?

Already saving with The Education Plan? Log in and evaluate your savings goal, including current contribution amounts. Considering opening a 529 plan? You can start saving today with The Education Plan.

*The legislation, now formally titled H.R. 1 was originally introduced under the informal name Big Beautiful Bill. While “H.R. 1” is the official designation used in Congress, the earlier nickname is sometimes referenced in discussions about the proposal.

This information is for general educational purposes and should not be considered financial advice or tax advice. We recommend consulting with a tax professional or financial advisor for personalized guidance.