Most people think of 529 plans as college savings tools. However, under the “One Big, Beautiful Bill Act,” these tax-advantaged accounts can be used to pay for more than just traditional higher education.
The new law expands the list of qualified 529 expenses to include a broader range of workforce training and credentialing costs. This includes tuition, fees, books, equipment, and the costs of required exams and continuing education associated with professional licenses, trade certifications, and vocational programs.
Here’s what you need to know about what qualifies and how to plan for the upcoming changes.
What is covered under the expanded rules?
Beginning with distributions made after July 4, 2025, 529 plan owners can use their funds for a broader range of education and training costs. Examples of newly eligible expenses include:
- Skilled trades and vocational programs: CDL training, HVAC certification, welding, plumbing, electrical work, cosmetology, and more.
- Professional license and certification fees: CPA exam prep and testing fees, bar exam review and registration, and other licensing exams in law, accounting, and finance.
- Required continuing education (CE): Courses needed to maintain licensure or certification for nurses, social workers, teachers, real estate agents, financial advisors, and others.
- Books, supplies, and equipment: Materials required as part of a qualified credentialing or licensing program.
To qualify, programs must typically be listed in the Workforce Innovation and Opportunity Act (WIOA) directory or the Web Enabled Approval Management System (WEAMS) maintained by the U.S. Department of Veterans Affairs. These directories include many GI Bill-approved and state-recognized workforce training programs.
This expansion supports individuals pursuing high-demand, non-college career paths by making their training expenses eligible for tax-free 529 withdrawals.
What remains ineligible?
The expansion is targeted and still excludes certain types of education-related costs. Recreational classes, general career development, or programs without a formal credential typically won’t qualify.
Additionally, state tax treatment may not update automatically. Some states may continue to tax withdrawals used for non-college programs, even if they qualify federally. Income-based deductions or credits may also be affected.
Why this matters for families and professionals
These changes make 529 plans far more flexible and inclusive of today’s varied education paths:
- Professionals pursuing licenses or CE credits can benefit from tax-advantaged savings.
- Families with children uncertain about attending college can fund trade or credential programs instead.
- Unused 529 balances can be redirected to adult learners without penalty.
How to plan now
Although the law has passed, the new rules only apply to distributions made after July 4, 2025. If you want to cover these expenses, here’s what to do:
- Confirm your program is eligible – Check the WEAMS database and search for WIOA eligible training providers in your state before enrolling or budgeting.
- Understand your state’s stance – Not all states follow federal rules, so check whether your state will tax non-college distributions.
- Consider timing your withdrawals – If you are using 529 funds for credentialing, you’ll want to ensure those expenses are paid after July 4, 2025, to avoid taxes or penalties.
Final thoughts
This policy shift transforms 529 plans from college-only tools into broader career-preparation accounts. It reflects a growing recognition that postsecondary education includes vocational training, licensing, and lifelong learning, not just four-year degrees.
Whether you’re a working adult pursuing a license, a teen heading to trade school, or a parent planning ahead, the expanded 529 rules can make your education journey more affordable and flexible than ever before.
