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Allows 529 plan distributions to pay qualified postsecondary credentialing expenses (tuition, fees, books, testing, continuing education) for recognized credential programs.
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 make workforce training and credentialing more affordable and employer-friendly, but it risks diverting college savings, producing a regressive tax benefit, and adding administrative complexity.
Students, apprentices, and workers can use 529 funds to pay for industry credentials, apprenticeships, testing, and continuing-education fees, making short-term job training more affordable and accessible.
Workers who must maintain professional licenses and certifications can use tax-advantaged 529 distributions to lower out-of-pocket continuing-education costs, helping them stay credentialed and employed.
Expands publicly supported workforce-training pathways by aligning education savings with apprenticeships and industry credentials, supporting employer talent pipelines and job readiness.
Students and families may have less tax-preferred savings available for traditional college degrees if 529 funds are spent on short-term credentials, potentially increasing future college costs for beneficiaries.
The change primarily benefits families who already save in 529 plans, meaning higher-income households may capture most of the tax advantage and the policy could be regressive without targeted measures.
Expanding eligible uses increases administrative complexity for state 529 plans and the IRS, creating compliance costs and potential confusion about which expenses qualify.
Based on analysis of 2 sections of legislative text.
Allows 529 college savings accounts to pay for qualified postsecondary credentialing expenses, including tuition, fees, books, required supplies/equipment, testing fees, and continuing education needed to obtain or keep a credential. It defines which programs and credentials qualify by listing several recognized pathways (state WIOA lists, VA WEAMS listings, reputable occupational exam prep, or Secretary of Education identification after consulting Labor). The change amends the Internal Revenue Code's definition of "qualified higher education expenses" to add these credentialing costs and applies to distributions made after the law is enacted.