529 Plans in 2026: Limits, Tax Breaks, and What OBBBA Changed

What changed for 529 plans in 2026?

The One Big Beautiful Bill Act (OBBBA) expanded what a 529 can pay for. From January 1, 2026 the annual K-12 withdrawal limit doubles to $20,000 per student, the list of qualified K-12 expenses grows well beyond tuition, and — since July 2025 — 529 money can be spent tax-free on recognized trade and professional credentialing programs.

For years a 529 was mostly a college account with a narrow K-12 tuition allowance bolted on. OBBBA, signed into law on July 4, 2025, widened it into a much more flexible education account. None of the core tax benefits were taken away; the changes only added new tax-free uses. Here's the before-and-after at a glance:

How much can a 529 withdraw for K-12 in 2026?

Up to $20,000 per student per year, tax-free, for qualified K-12 expenses — double the previous $10,000 cap, effective January 1, 2026. The limit is per beneficiary, so a family paying private-school tuition for two children can withdraw up to $20,000 for each of them.

This is the headline number. The federal cap on tax-free 529 withdrawals for K-12 rose from $10,000 to $20,000 per student for 2026 onward. If you use a 529 to help pay private or religious school tuition, that doubling can materially change what the account covers in a year. Model how withdrawals draw the balance down against your projected costs with the 529 college savings calculator.

One planning caution: withdrawals for K-12 give the money far less time to compound than saving for college does. Pulling $20,000 a year for grade school means those dollars never see the decade-plus of tax-free growth that makes 529s so powerful for higher education — so weigh near-term tuition help against long-term growth for the same child.

What are the new qualified K-12 expenses?

Beyond tuition, a 529 can now cover curriculum and textbooks, tutoring by a qualified tutor, online learning platforms, standardized test fees like the SAT and ACT, dual-enrollment college courses taken in high school, and educational therapies for students with disabilities — expansions that took effect in July 2025.

The old K-12 rule was narrow: tuition, and nothing else. OBBBA broadened the definition of qualified K-12 expenses considerably, which especially helps homeschooling families and parents supplementing a public-school education. The expanded categories include:

Curriculum materials — textbooks, workbooks, and digital learning tools. Tutoring services from a qualified tutor. Online education platforms and subscriptions. Standardized test fees (SAT, ACT, AP exams). Dual-enrollment tuition for college courses taken during high school. And educational therapies for students with disabilities. As always, keep receipts: a withdrawal is only tax-free if it matches a genuinely qualified expense.

Can you use a 529 for trade school and credentials?

Yes — this is one of OBBBA's biggest additions. Since July 2025, 529 funds can be spent tax-free on qualified postsecondary credentialing programs: trades like welding, plumbing, cosmetology and CDL training, and professional licenses such as the CPA and bar exam. Eligible costs include tuition, testing fees, books, equipment, and required continuing education.

For a long time a 529 was only useful if your child took the traditional college path. That's no longer true. The account can now fund recognized non-degree credentialing — the kind of career training that leads to a license or certification rather than a bachelor's degree. That covers program tuition and fees, testing fees, books, supplies and equipment, and even continuing education required to keep a credential current.

Practically, this makes a 529 a hedge against the uncertainty of a young child's path. Whether they end up at a four-year university, a welding certificate, or studying for the CPA exam, the same account can pay for it tax-free — which removes one of the biggest historical worries about over-funding a 529 for a kid who might not go to college.

What hasn't changed: the core 529 tax breaks

All the reasons to open a 529 in the first place are intact. Investments grow tax-free, withdrawals for qualified higher-education costs are tax-free, up to $10,000 (lifetime) can repay student loans, and unused funds can roll to the beneficiary's Roth IRA — up to $35,000 over a lifetime — under SECURE 2.0.

OBBBA added uses; it didn't remove any. The engine is the same: money you contribute grows free of federal tax, and withdrawals for qualified higher-education expenses — tuition, fees, books, and room and board for enrolled students — come out entirely tax-free. Estimate what four years will actually cost with the college cost calculator before deciding how much to save.

Two escape hatches remain for leftover money, which is what makes over-saving less risky than it sounds. Up to $10,000 of a 529 can be used, per borrower, to repay student loans. And under the SECURE 2.0 Act, a 529 that's been open at least 15 years can roll unused funds into the beneficiary's Roth IRA — up to $35,000 over their lifetime, subject to annual IRA contribution limits — turning education savings that weren't needed into a retirement head start.

529 contributions and the 2026 gift-tax rules

Contributions are gifts to the beneficiary, and for 2026 the annual gift-tax exclusion is $19,000 per donor, per beneficiary. A special 529 rule lets you 'superfund' five years of gifts at once — up to $95,000 from one person, or $190,000 from a couple — without touching your lifetime gift-tax exemption.

There's no federal deduction for 529 contributions, but there's no federal contribution limit either — the constraint is gift-tax law. In 2026 you can give up to $19,000 per beneficiary (Rev. Proc. 2025-32) without any gift-tax filing; a married couple can jointly give $38,000. That's usually more than enough, but 529s also allow front-loading.

The superfunding election lets you treat a single large 529 contribution as if it were spread evenly over five years. One person can put in up to $95,000 (5 × $19,000) at once, or a couple up to $190,000, and elect to spread it across five years of exclusions so none of it counts against the lifetime exemption. It's a favourite estate-planning move for grandparents — a large sum starts compounding tax-free immediately, while staying inside the annual gift rules on paper. Many states also offer their own income-tax deduction or credit for 529 contributions; those are separate from the federal rules and vary widely.

Do states follow the new 529 rules?

Not always. These are federal changes. Many states automatically conform, but some may not treat the new K-12 or credentialing withdrawals as qualified for state income-tax purposes — which could make a withdrawal state-taxable even though it's federally tax-free. Check your own state's plan before you rely on a new use.

State conformity is the footnote that catches people out. A withdrawal that's perfectly qualified federally can still be treated as non-qualified by your state if the state hasn't adopted the new rules — potentially clawing back a previously-claimed state deduction or taxing the earnings. This is most likely for the newest uses (expanded K-12 expenses and credentialing) rather than the long-standing college benefit.

Before making a withdrawal for one of the new categories, confirm your state's treatment with your 529 plan administrator. And if you're weighing how OBBBA's other provisions land where you live, our broader OBBBA coverage tracks state conformity across the new federal breaks.