Sponsors (6)
Allows 529 plan distributions to be used tax‑free for specified K–12 expenses (tuition, curriculum, tutoring, tests, dual enrollment, and licensed therapies).
The bill broadens tax‑free 529 uses to cover many K–12 costs—making schooling and certain therapies more affordable for families—while trading off reduced federal revenue, potential public‑school equity harms, and the risk of depleting college savings.
Parents and families can use 529 plan funds tax-free to pay for K–12 tuition and a broad set of elementary/secondary expenses (tuition, curriculum, books, online materials, tutoring), giving households greater tax-advantaged flexibility and reducing immediate out-of-pocket schooling costs.
Students with disabilities can use 529 funds to access licensed educational therapies (occupational, behavioral, physical, speech-language), improving access to medically or educationally necessary services.
Families can use 529 funds tax-free for AP, dual-enrollment, and college‑admission exam fees, lowering college-preparation costs and potentially expanding access to higher‑education opportunities.
Allowing tax-free 529 withdrawals for K–12 expenses will likely reduce federal tax revenue, creating budgetary pressure that could shift costs to other taxpayers or require offsets.
Permitting 529 funds to pay for private or religious K–12 tuition effectively subsidizes private schooling, raising equity concerns and potentially weakening public-school funding and access for low-income students.
Using 529 balances for K–12 needs may deplete savings intended for college, increasing the likelihood families will need to borrow for higher education later.
Based on analysis of 2 sections of legislative text.
Official title: To amend the Internal Revenue Code of 1986 to permit kindergarten through grade 12 educational expenses to be paid from a 529 account.
Introduced February 4, 2025 by Kevin Hern · Last progress February 4, 2025
Expands the list of tax‑free uses for 529 college savings plans to expressly allow many K–12 elementary and secondary expenses. That includes tuition at public, private, or religious schools; curriculum, books, and online materials; qualified tutoring and out‑of‑home classes; standardized test and AP exam fees; dual‑enrollment fees; and licensed/accredited educational therapies for students with disabilities. The change applies to distributions made after enactment.