Strategic Planning

New 529 Plan Rules for 2026: What Families Need to Know

By Erica Hubert, CFP®, CPWA®

Recent updates to 529 education savings plans expand how these funds can be used, particularly for K–12 education and credentialing programs. These changes, effective in 2025 and 2026, create additional planning opportunities for families.

Higher K–12 Withdrawal Limits

Beginning January 1, 2026, the federal limit for K–12 withdrawals increases from $10,000 to $20,000 per beneficiary, per year.

The ability to roll unused 529 assets into an ABLE account has also been made permanent under federal law.

State tax treatment may vary. While some states have adopted these changes, others may not conform, so state-specific rules should be reviewed before taking withdrawals.

Expanded K–12 Qualified Expenses

529 plans can now be used for a broader range of K–12 expenses, including:

Tuition
Curriculum and curricular materials
Books and instructional materials
Online educational resources
Tutoring or educational classes outside the home*
Standardized testing fees (e.g., AP and college admission exams)
Dual enrollment fees
Certain educational therapies for students with disabilities

*Tutoring must be provided by an unrelated instructor who is a licensed teacher, has taught at an eligible institution, or is a qualified subject-matter expert.

Credentialing Expenses (Effective July 2025)

529 funds may now be used for approved credentialing programs, expanding use beyond traditional college paths. Eligible expenses include:

Tuition, fees, books, supplies, and required equipment
Testing fees required to obtain or maintain a credentia
Continuing education required to maintain a credential

Important Considerations

The scholarship exception (penalty-free withdrawals up to the amount of a scholarship, with taxes still due on earnings) does not apply to K–12 scholarships
Credentialing programs may qualify for this exception depending on the program and should be reviewed case by case
State tax rules may differ, and non-conforming states may impose taxes or penalties

Bottom Line

These updates make 529 plans more flexible, but the details matter—especially around state rules and qualifying expenses.
If you have any questions about how these changes apply to your situation, don’t hesitate to reach out—we’re here to help.