Key takeaways

• The annual K-12 withdrawal cap for 529s rises from $10,000 to $20,000 per student.
• Qualified expenses now include homeschool curriculum programs, test fees, tutoring, licensing, and some learning-related therapies.
• Rules offer more opportunities to spend and save for non-traditional college track education choices.

July’s spending bill doubles the withdrawal limit for K-12 expenses to $20,000 and expands how families can use their education savings, including for nontraditional learning and IRA rollovers.

A new set of rule changes for 529 college savings programs in the sweeping Big Beautiful Bill Act could make these plans more flexible than ever. Whether that’s through higher K-12 spending limits to broader expense categories — such as tutoring, test fees, or vocational training — the law intends to give 529 savers more ways to plan for education expenses.

The bill also updates existing rollover rules, which may provide more opportunities to move unused 529 funds into retirement accounts under certain conditions.¹ This combination of flexibility and expanded uses could reduce the risk of overfunding a 529 account while also offering new ways to pay for a broader number of learning journeys. Americans held roughly $500 billion in 529 plans as of mid-2025 — a record high.² Changes to eligible expenses may have a big impact on education savers.

New 529 rules in 2025: What’s changed

Under the new 529 rules, accountholders can increase their total K-12 withdrawal amount from $10,000 to $20,000 per student.³ It also expands what families can use 529s for. In addition to tuition expenses, account holders can now withdraw to pay for:

• Test fees for standardized and college entry exams
• Credentialing programs and vocational studies
• Structured homeschool curricula and instructional materials
• Academic tutoring and educational therapies
• Support for diagnosed learning differences, including ADHD

The last category could have a major impact on the 1 in 5 children who have learning and attention differences in the U.S.⁴ Families can now use 529 accounts for qualifying tools and services that help with focus, executive functioning skills, and classroom engagement. Households that had to pay for these resources out of their own pocket may now benefit from tax advantages when using the 529. Although some services for students with ADHD may be available through public schools, programs outside of school (private therapy, specialized instruction, and coaching) can cost upwards of $15,000 annually in some cases.^5,6

Read more: College enrollment rebounds as students and employers shift priorities

New 529 flexibility means new ways to use it

The 529 expansion may help address a long-standing question with these accounts: What happens if a child does not go to college, or the funds go unused? New rules give families more flexibility to use savings across a wider range of educational journeys. 
For example, if a person takes $15,000 out of a 529, they could use $10,000 to pay for private education and $5,000 for tutoring and test fees. Another family could use funds to help pay for homeschooling programs. People can also cover expenses for job training or licensing programs, such as cosmetology school, HVAC training, or EMT prep.⁷ 

It is also possible for accountholders to combine this increased expense flexibility with the SECURE 2.0 rollover provision.⁸ This act allows eligible 529 funds to rollover into a Roth IRA. People can rollover up to $35,000 in their lifetime, so long as the account has been open for at least 15 years. This may also position 529s as a tax-advantaged long-term savings tool, especially when the full balance isn’t needed for education. 

State-level 529 considerations

The new 529 rules are federal, but not every state will automatically conform to them. The law is a sweeping federal tax package, meaning that qualifying expenses may be tax-deductible on a federal but non-qualifying on a state level.⁹ For example, some still treat K-12 withdrawals or therapy-related expenses as non-qualified for state tax purposes, even though they are federally permitted. For example, California and New York have stricter definitions around what qualifies for 529 purposes on a state level.¹⁰

Many states are in the process of aligning the new federal rules to their own provisions.¹¹ Others may follow once legislative sessions resume this fall. Until then, families may want to exercise caution with what they assume to be covered on their state tax level. They should also consult with a financial professional about these changes.

Read more: The price of college admission

Savings tools beyond the 529

The recent spending act also expands other programs designed to help families save for education, disability support, and long-term security.

• Achieving a Better Life Experience (ABLE) accounts now allow for higher contributions while retaining rollover eligibility from 529 plans.^12,13 These accounts offer tax-free growth and withdrawals for qualifying disability-related expenses. These can include education, therapy, housing, and assistive technology, among others
• A new pilot program creates savings accounts for children born between 2025 and 2028, with an opening balance of $1,000 in federal seed funding.¹⁴ Parents, employers, and nonprofits can contribute up to $5,000 each per year.¹⁵ The funds convert into a traditional IRA when the child turns 18 years old.

Making the most of a 529 in 2025 (and beyond)

Updates to 529 rules may give families more control over how they save for education, especially as needs or career paths change over time. This expanded list of qualifying expenses offers clearer ways to support learners of all stripes, be they college-bound teens, young adults pursuing a trade, or students at independent schools.

Families considering new contribution or withdrawal strategies may want to revisit their savings goals. Households with young children can consider a broader array of education options with the expanded list of qualifying expenses. Older students or account holders with unused funds could also take advantage of revised rules and rollover options. 

For some families, 529s are becoming more than just a way to pay for college: They can also be tools to plan for a child’s complete education.