The One Big, Beautiful Boost for 529 Plan: What Families Should Know About the New Rules

Monday, January 12, 2026

By Francesca L. Passen, CFP
Hobbs Group Advisors, LLC

Recent updates from the “One Big Beautiful Bill” (OBBBA) have increased families’ savings potential specifically through 529 savings plans. These changes offer more flexibility as well for parents and grandparents, or students themselves. It does not matter about the age of the beneficiary, anyone with qualified education costs can take advantage of existing and new rules for 529 Plans.

So, what’s new for 529 Plans?

K–12 Tuition Limit Doubles

  • Beginning in 2026, you can withdraw up to $20,000 per student per year (previously $10,000) for private elementary or secondary school tuition.
  • This increase gives families more room to use 529 savings during the K–12 years while still preserving funds for college and beyond. Many families experienced K-12 costs that were greater than $10,000 a year as well as private school tuition has inflated over the years.

More Postsecondary Programs Qualify

  • Tax-free withdrawals now extend to a broader list of recognized credentialing and training programs.
    Qualifying expenses may include:

    • Tuition and fees
    • Books and supplies
    • Required equipment
    • Costs tied to enrollment or attendance

This expansion supports a wider range of paths like college, trade school, professional certifications, and adult retraining programs.

529-to-ABLE Rollovers Are Now Permanent

Families can permanently roll over unused 529 funds into an ABLE account (subject to existing limits and requirements). This provides long-term flexibility for beneficiaries with qualifying disabilities and ensures savings can be used for disability-related expenses without tax consequences.

What’s Staying the Same

Many of the core 529 rules families rely on remain unchanged:

  • Tax-free growth for qualified education expenses
  • College and graduate school costs still fully eligible
  • Apprenticeship program eligibility unchanged
  • Student loan repayment still allowed up to $10,000 lifetime
  • Grandparents can contribute with no income restrictions
  • Superfunding (5-year front-loading) rules unchanged
  • Account ownership and control remain with the owner
  • State-specific tax deductions/credits remain unchanged
  • Roth IRA rollover remains an option unused funds

What This Means for Parents and Grandparents

Parents of Young Children:

  • More flexibility for private school tuition (because private school K-12 limit is $20,000 in 2026)
  • Confidence that savings can support your child’s educational path
  • Options if your child chooses a nontraditional career route

Parents of Teens:

  • Expanded support for trade, technical, or certification programs
  • Continued ability to use funds for future student loan repayment

Grandparents:

  • More ways to support education earlier in a child’s life
  • Flexibility to repurpose unused funds if a child’s needs change
  • Confidence that contributions can stay tax-efficient across generations

We’re Here to Help

If you’d like to review your family’s 529 strategy or explore how these new rules might benefit your children or grandchildren, feel free to reach out to our office. These changes provide valuable opportunities to strengthen long-term education planning.

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