Sponsors (6)
The bill expands tax‑favored 529 uses to many K–12 expenses, improving affordability and access (including for students with disabilities) while trading off federal revenue, potential incentives toward private schooling, reduced college savings, and added compliance burdens.
Parents and students can use 529 plan funds tax-free for a wide range of K–12 needs — including tuition, curriculum, books, online materials, tutoring, AP/dual‑enrollment and college‑admissions exam fees, and licensed educational therapies — reducing out‑of‑pocket schooling costs and widening educational options.
Families gain greater tax-advantaged flexibility in how they use education savings, allowing earlier or alternative uses of 529 balances to meet immediate K–12 expenses.
Students with disabilities can use 529 funds for licensed educational therapies (occupational, behavioral, physical, speech‑language), improving access to medically and educationally necessary services.
Taxpayers could face reduced federal revenue because 529 distributions for K–12 uses are tax‑favored, increasing budgetary pressure or shifting costs elsewhere in the budget.
Families who use 529 funds for private or religious K–12 tuition effectively receive a federal subsidy for private schooling, which may exacerbate equity concerns and reduce resources or political support for public schools.
Using 529 balances for K–12 needs may deplete funds otherwise reserved for college, increasing the likelihood that students will need to borrow for higher education later.
Based on analysis of 2 sections of legislative text.
Permits tax-free 529 plan withdrawals to pay specified K–12 costs (tuition, curriculum, books, tutoring, test fees, dual enrollment, and licensed therapies) for public, private, or religious schools.
Introduced February 4, 2025 by Kevin Hern · Last progress February 4, 2025
Expands federal 529 college-savings plan rules to let distributions pay a wide range of elementary and secondary school costs for students in public, private, or religious schools. Covered K–12 costs explicitly include tuition, curriculum and curricular materials, books, online materials, qualified tutoring and classes, certain test fees, dual-enrollment fees, and licensed/accredited educational therapies for students with disabilities. The change is made by amending the federal tax code definition of “qualified higher education expense” so these K–12 expenses qualify for tax-free 529 plan distributions; it applies to distributions made after the law is enacted.