Expanded Qualified Education Expenses

H.R. 1, 119th Congress, was signed into law on July 4, 2025, and contains provisions that expand qualified education expenses for 529 college savings plans like the LoneStar 529 Plan® and the Texas College Savings Plan®. Account owners can begin using 529 funds for the new expenses as of July 5, 2025.

Here is a summary of the provisions.

K-12 Expenses

Funds can be used free of federal income tax for K-12 enrollment or attendance at a public, private or religious elementary or secondary school up to $10,000 per year ($20,000 beginning in 2026). Eligible K-12 expenses now include:

  • Tuition
  • Curriculum and curricular materials
  • Books or other instructional materials
  • Online educational materials
  • Charges for tutoring or educational classes outside of the home, including at a tutoring facility, when the tutor meets certain qualificationsfootnote 1
  • Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination or any examinations related to college or university admission
  • Fees for dual enrollment at an institution of higher education
  • Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical and speech-language therapies

The state tax consequences of using 529 plans for K-12 tuition will vary by state and may involve taxes, penalties and the recapture of tax deductions. Participants should consult with a tax or legal advisor in this regard.

Postsecondary Credentials

Funds can also be used free of federal income tax for enrollment or attendance at a recognized postsecondary credential program meeting certain qualifications.footnote 2 Eligible postsecondary credentialing expenses include:

  • Tuition
  • Fees for enrollment or attendance
  • Books
  • Supplies and equipment required for participation
  • Fees for testing or continuing education if required to obtain or maintain the credential

Rollovers from 529 Accounts to ABLE Accounts

A provision allowing 529 savers to transfer funds to an ABLE account for the beneficiary or a member of the family of the beneficiary was previously set to expire on Dec. 31, 2025. However, the new legislation has removed this expiration date, meaning rollovers from 529 accounts to ABLE accounts are now permitted beyond 2025.

Footnotes

  1. The tutor cannot be related to the student and must qualify as a licensed teacher, a current or former teacher at an eligible educational institution, or a subject matter expert in the relevant subject.
  2. To qualify, credential programs must be authorized by the Workforce Innovation and Opportunity Act, a military credential recognized by the Veterans Benefits Administration, approved by the federal or state government, or aligned with other approved postsecondary credential organizations.