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Allows 529 plan distributions to pay for eligible postsecondary credential programs, exams, and continuing-education costs for recognized credentials.
Official title: To amend the Internal Revenue Code of 1986 to treat certain postsecondary credentialing expenses as qualified higher education expenses for purposes of 529 accounts.
Introduced February 7, 2025 by Robert J. Wittman · Last progress February 7, 2025
The bill broadens tax-advantaged 529 use to support apprenticeships, industry credentials, and license maintenance—improving access to workforce training and reducing some continuing-education costs, while risking reduced college savings for beneficiaries, added administrative complexity, and a regressive tax benefit favoring higher-income savers.
Students, apprentices, and workers can use 529 savings to pay for industry-recognized credentials and apprenticeship costs, increasing affordable training pathways and supporting job readiness.
Workers and professionals can use tax-advantaged 529 distributions to maintain professional licenses and certifications, lowering out-of-pocket continuing-education costs.
Higher-income families who already save in 529 plans are most likely to benefit from the expanded uses, creating a regressive tax advantage that disproportionately helps wealthier savers.
Beneficiaries may divert 529 balances to short-term credentials and apprenticeships and end up with less saved for traditional college degrees, potentially reducing future college affordability for some families.
Expanding permitted 529 uses increases complexity for plan administrators and the IRS, creating new compliance burdens and potential confusion about eligible expenses.
Based on analysis of 2 sections of legislative text.
Allows 529 college savings accounts to pay for approved postsecondary credential programs and related costs. It expands the definition of "qualified higher education expenses" to include tuition, fees, books, testing and continuing-education costs tied to recognized postsecondary credential programs and clarifies which credential programs and credentials qualify. The change takes effect for distributions made after the bill becomes law and defines eligible programs and credentials by four pathways (state lists under WIOA, VA listings, reputable credentialing/exam preparation, or Secretary of Education identification after Labor consultation).