OBBBA Supercharges 529 Plans: Bigger Limits, More Tax-Free Uses!

The One, Big, Beautiful Bill Act (OBBBA) contains enhancements to Section 529 plans. The new law expands the list of educational expenses that can be paid with tax-free distributions. Starting in 2026, 529 plan funds can cover qualified expenses, including books, online instructional materials, tutoring or classes outside the home, and some testing fees. In addition, the OBBBA boosts the annual limit on tax-free distributions for qualified elementary and secondary school expenses from $10,000 to $20,000. And beginning in 2027, it introduces a tax credit of up to $1,700 for contributions to organizations that provide scholarships to primary and secondary school students.