Mega Doctor News
Texas Border Business
Families using 529 education savings plans have gained more flexibility thanks to the “One Big Beautiful Bill Act,” or OBBBA (Public Law 119‑21), signed into law on July 4, 2025. Several provisions affecting 529 plan usage took effect as soon as July 5, 2025, and other changes phase in later.
As of July 5, 2025, the law allows 529 funds to be used tax-free for a broader range of K–12 expenses beyond tuition—such as curriculum materials, instructional books, online educational materials, tutoring, standardized test fees (like SAT/ACT), dual-enrollment fees, and educational therapies for students with disabilities. Previously, tax-free coverage for K–12 was limited to tuition, and only up to $10,000 annually.
Looking ahead, starting January 1, 2026, the annual limit for K–12 withdrawals doubles from $10,000 to $20,000 per beneficiary. That means families can access more of their savings for greater educational needs without incurring taxes.
The OBBBA also makes permanent a provision allowing rollovers from 529 savings plans into ABLE accounts—accounts intended for individuals with disabilities. This rollover option had been set to expire on December 31, 2025, but now has no expiration date. Families can continue to utilize the ABLE-to-529 flexibility indefinitely.
These enhancements reflect a significant expansion in how education savings can be used. As summarized, the bill “doubles the K‑12 withdrawal cap and expands qualified expenses to include homeschool curriculum programs, test fees, tutoring, licensing, and some learning‑related therapies”.
In sum:
• Effective July 5, 2025: Expanded K–12 expense categories are eligible for tax-free 529 use.
• Effective January 1, 2026: Annual tax-free withdrawal limit for K–12 increases to $20,000.
• The provision allowing rollovers from 529 plans to ABLE accounts is now permanent.Families should be aware of these changes to make the most of their 529 savings. Keep in mind that these federal changes are effective immediately or as scheduled—but state-level rules may differ, so it’s wise to consult your plan administrator or tax advisor before m
See related stories:
