If you thought 529 plans were just for college savings, think again. The One Big Beautiful Bill Act (OBBBA) has officially expanded what these powerful education savings accounts can do—and the new rules make them far more flexible for families, entrepreneurs, and career changers alike.
Let’s unpack what’s new and why this update is one of the most exciting parts of OBBBA for 2025 and beyond.
What’s Changing Under OBBBA
For years, 529 plans were mainly used for traditional college expenses like tuition, books, and room and board. Over time, Congress loosened the rules to include K–12 tuition, apprenticeships, and even limited student loan repayments. But OBBBA takes it several steps further.
Beginning in 2025, you can now use 529 plan funds for a broader range of education and career-related expenses—including certain workforce training, credentialing, and even small business education programs.
The intent is to make 529s more useful for Americans who want to build new skills, start businesses, or pivot careers—without losing the tax benefits that make these plans so attractive.
New Qualified Expenses
Under the OBBBA update, qualified education expenses now include:
- Tuition and fees for vocational schools, trade programs, or approved online certifications
- Career development courses—including leadership, entrepreneurship, and technical training
- Business education or certification programs, such as bookkeeping or marketing courses for small business owners
- Licensing or credential renewal fees required for professional practice
- Up to $15,000 for small business startup education costs, if taken through an accredited or recognized program
This expansion recognizes that education today doesn’t always happen in a classroom. Whether you’re improving your trade skills, launching a new business, or transitioning into a new field, your 529 can now support those goals.
Expanded Rollover Opportunities
OBBBA also expands how leftover 529 funds can be used. Previously, unused 529 balances could be rolled into a Roth IRA under limited conditions. Now, you can also roll over up to $45,000 into an Education Savings Account (ESA) or another family member’s 529—allowing flexibility if the original beneficiary’s plans change.
This change helps families avoid penalties and keep education funds working for them instead of getting trapped in an unused account.
Why This Matters for Business Owners and Families
If you own a business or plan to start one, this could be a game-changer. You can now use your 529 plan to fund legitimate business education expenses—without triggering taxes or penalties. That includes courses that teach business management, marketing, or other entrepreneurial skills that strengthen your company’s foundation.
For families, it opens the door for children and parents alike to use 529 funds for career growth or retraining opportunities.
A Quick Example
Let’s say you’re an esthetician who wants to open your own spa. Under the new rules, your 529 funds could cover part of the cost for an accredited small business management course or even certification classes for advanced skincare techniques. It’s practical, proactive, and now—tax-free.
Key Takeaways
- 529 plans now cover more than just college
- You can use funds for business education, trade certifications, and workforce training
- Rollovers are more flexible—allowing up to $45,000 into an ESA or another beneficiary’s 529
- These updates encourage lifelong learning and entrepreneurship, all with the same tax advantages 529s are known for
The OBBBA 529 expansion gives you more freedom to invest in education at any stage of life—whether you’re helping your kids, growing your business, or reinventing your career.
If you’d like to explore how these new 529 plan rules could fit into your long-term financial or tax strategy, contact us to discuss your tax strategy.