Sponsors (17)
The bill expands use of tax-advantaged 529 savings to make postsecondary credentials, apprenticeships, and occupational licenses more affordable for students, workers, and military families, at the cost of potential lost tax revenue, greater administrative burdens, and risks of funding inconsistent or low-value credentials across states.
Students and families can use 529 funds to pay for tuition, fees, books, testing, and required continuing education tied to recognized postsecondary credential programs, expanding affordable education funding options.
Workers pursuing industry credentials, apprenticeships, or state occupational licenses can tap tax-advantaged 529 savings to pay required costs, supporting workforce training and re-skilling.
Veterans and servicemembers can use 529 accounts for credentials listed in the VBA WEAMS directory and DoD COOL, making credentialing more affordable for military-connected individuals.
Tying eligibility to state lists and industry recognition risks inconsistent standards across states and programs, increasing the chance that 529 funds will pay for low-value or poor-quality credentials.
Account custodians and 529 administrators will face additional compliance and verification burdens to determine whether programs and expenses meet the new credentialing criteria, raising administrative costs and complexity.
Allowing tax-preferred use of 529 funds for credentials may reduce future tax revenue, potentially increasing deficits or forcing shifts in budget priorities.
Based on analysis of 2 sections of legislative text.
Allows 529 plan funds to pay tax-free for certain recognized postsecondary credential programs and related costs (tuition, books, testing, continuing education).
Allows money in 529 college savings accounts to be used tax-free for certain short-term and workforce-focused postsecondary credential programs and related costs. It defines which credentials and programs qualify and lists eligible expenses such as tuition, books, testing fees, supplies, equipment, and required continuing education. The change adds definitions and eligibility tests to the Internal Revenue Code so distributions from 529 plans made after enactment can pay for recognized credential programs (for example, programs on State workforce lists, certain military and veteran credential lists, registered apprenticeships, and programs accredited or recognized by federal or state authorities).
Introduced February 26, 2025 by Amy Klobuchar · Last progress February 26, 2025