Sponsors (4)
Introduced January 28, 2025 by Marie Gluesenkamp Perez · Last progress January 28, 2025
The bill lets 529 account beneficiaries buy depreciable business equipment for certain trades—boosting flexibility and entrepreneurship for some families and students—but risks lost tax revenue, added administrative complexity, and uneven access across fields.
Students and beneficiaries in qualifying trades can use 529 funds to buy depreciable business equipment needed to start or run a business, improving access to work tools and enabling entrepreneurship.
Families saving in 529 accounts gain greater flexibility in how funds are spent, reducing the need to tap other savings or take loans to purchase required business equipment.
Taxpayers could face larger forgone federal tax revenue if 529 distributions expand to cover business equipment, which may increase the deficit or reduce funding available for other services.
Broadening allowable 529 uses to include business equipment would create new complexity and compliance burdens for families and the IRS in determining eligible NAICS codes and depreciable property rules.
The change may disproportionately benefit beneficiaries entering certain listed trades (specific NAICS codes) while excluding others, producing unequal access to the benefit based on chosen field of work.
Based on analysis of 2 sections of legislative text.
Permits 529 plan withdrawals to pay for certain tangible, depreciable business property (not buildings) used by beneficiaries in specified NAICS industries.
Allows withdrawals from Section 529 education savings accounts to pay for certain "qualified business trade expenses": tangible, depreciable business property (not buildings) used by the beneficiary in specified NAICS industry codes. The change treats those business property purchases made by the designated beneficiary as qualified higher education expenses for 529 accounts. The provision takes effect for expenses paid in taxable years beginning after the date of enactment and simply adds the new expense category to the Internal Revenue Code's definition of qualified 529 expenses.