Expenses related to education at all levels continue to rise, and a tool for parents to manage these expenses has been 529 savings plans.
Traditionally, these tax-advantaged savings accounts helped parents save for their children’s college tuition. But for students pursuing nontraditional career paths — such as vocational training or professional credentials — there was not a similar, tax-advantaged option to save for those costs.
Now, more individuals can tap into the benefits of 529 savings plans because H.R. 1, commonly referred to as OBBBA, broadened the definition of qualified expenses. The tax-advantaged plans now cover vocational programs, apprenticeships, credentialing, and licensing.
Additionally, curriculum materials, tutoring, and standardized test fees fall under qualified expenses, and the annual withdrawal limit for K-12 costs increased by 100% to $20,000. The change took effect immediately after the law’s signing in July 2025.
“This account can now provide for a range of possible future career paths,” said Todd Sloves, director of Congressional and Political Affairs at AICPA. “Even if your child doesn’t want to pursue a traditional four-year degree … they’ll now be able to save for whatever fees go along with the apprenticeship program or some other certificate program.”
529 plan expansion: Fueling education, careers, and the CPA profession
529 savings plans offer families two options: a prepaid tuition plan or an education savings plan. Both plans allow the investments to grow tax-free; withdrawals for qualified expenses are also exempt from taxes. The savings plans never expire and enable the beneficiary to change to another eligible family member, including a grandchild. Unspent funds can even be rolled over into a Roth IRA.
Before being added to H.R. 1, the expansion of 529 savings plans was originally introduced as a bipartisan bill, the Freedom to Invest in Tomorrow’s Workforce Act.
The popularity of 529 savings plans has grown — while 7 million accounts were reported in 2004 by the Senate Finance Committee, there were 16.8 million active 529 accounts in 2024, according to the Education Data Initiative. Though the number of accounts has more than doubled, 54% of parents haven’t heard of these beneficial accounts, highlighting the need to advise your clients on education savings strategies.
Not only does the 529 expansion provide an additional way to interact with clients, it may also benefit you, too. If your preexisting 529 savings plan had leftover funds, you can now apply those funds to completing continuing professional education (CPE).
Sloves is also hopeful this will welcome more individuals into the profession by removing a financial barrier from the process of becoming a CPA.
“The expense is sometimes a hurdle in a lot of cases,” said Sloves. “If you’re a student in an accounting program and you’re looking at taking the CPA Exam soon, this is now another option for you to be able to use those funds … [A 529 savings plan] is not just going to cover the four-year degree, it’s also going to cover the expenses that come after that.”
The expansion of 529 plans is a big benefit to the profession, said Sloves, and one of the issues on the radar of the AICPA Advocacy team. It’s important to stay in the know about the profession-focused legislative issues Slove’s team is working on, such as the first comprehensive regulatory framework for stablecoin or any of the proposed changes to Section 404(b) within the Sarbanes-Oxley Act. Explore the efforts of AICPA Advocacy.