New legislation passed in 2025 quietly expanded what 529 plans can pay for, making it easier for working adults to tap into tax-advantaged 529 funds for continuing education costs that were previously out of reach. The tax act better known as the One Big, Beautiful Bill Act extended 529 plan benefits to cover workforce training, professional licensing exams, and continuing education credits required to maintain a license. That means tradespeople, nurses, accountants, teachers, and many other professionals can use a 529 plan to make continuing education more affordable. Here’s what qualifies, what still doesn’t, and how to make the most of the expanded rules.
How can 529 plans help working adults?
529 plan funds can now be withdrawn tax-free to pay for a wider range of education and training costs, including:
- Skilled trades and vocational programs, such as CDL training, cosmetology school, HVAC certification, plumbing, welding, and electrical work;
- Professional license and certification fees, including CPA exam prep, bar exam fees, and other test costs required for licensure in law, accounting, finance, and more;
- Continuing education (CE) credits required to maintain licensure or certification for nurses, teachers, social workers, real estate agents, and financial advisors; and
- Books, supplies, and equipment necessary for qualified licensing or credentialing programs.
While 529 plans could previously be used to pay for many educational expenses at colleges and universities, additional workforce training programs qualify now. These programs must be listed in the Workforce Innovation and Opportunity Act (WIOA) directory or the Web Enabled Approval Management System (WEAMS) database, and include many state-recognized and GI Bill-approved training providers.
Which expenses are eligible, and what still doesn’t qualify?
Eligible expenses include tuition, required fees, books, supplies, equipment, and now, professional exams and required CE courses. However, room and board costs remain qualified only when the beneficiary is enrolled at least half-time in a degree or certificate program, and are subject to the program’s published cost of attendance.
The expansion does not cover:
- Recreational or hobby classes
- General career development programs without a formal credential
- Travel and transportation expenses
Additionally, some states may not immediately align with the new federal rules. Check with your state’s plan administrator to confirm how these new uses are treated for state income tax purposes.
Other requirements for 529 qualification
For traditional college expenses, including tuition, fees, and room and board, the school must be eligible for Title IV federal student aid. This includes most accredited colleges, community colleges, and graduate programs.
You can use the Eligible Institution Lookup tool to verify eligibility. Study abroad may also qualify if offered through a Title IV school. However, travel costs are not considered qualified expenses.
After July 4, 2025, additional programs outside of Title IV schools also qualify. These must generally be listed in the WIOA Eligible Training Provider List or the WEAMS database.
Who can use a 529 plan?
Individuals of any age can use a 529 plan. You can open a 529 plan and name yourself as the beneficiary. If you already have a 529 plan for a child or other relative and want to make withdrawals for your own education, you can change the beneficiary of an existing account to yourself.
Note: if the 529 is a custodial account, you cannot change the beneficiary to a parent or other adult, since the account legally belongs to the minor beneficiary.
No double-dipping with the Lifetime Learning Tax Credit
Adults continuing their education through the Lifetime Learning Tax Credit may qualify for a maximum $2,000 federal income tax credit.
To avoid penalties, you must subtract any expenses used to claim the Lifetime Learning Tax Credit (LLTC) from your total when calculating tax-free 529 plan withdrawals.
In 2026, taxpayers using the LLTC may claim a 20% tax credit on up to $10,000 combined tuition and mandatory fees for themselves, their spouse, and their dependent children if they meet income requirements. The credit phases out for single filers with a modified adjusted gross income (MAGI) between $80,000 and $90,000 ($160,000 and $180,000 for joint filers), and is eliminated above $90,000 ($180,000 for a couple).
Unlike the American Opportunity Tax Credit, the Lifetime Learning Tax Credit does not require the student to be enrolled in a degree program at least half-time, and there is no limit on the number of years you may claim the credit.
However, the IRS does not allow double-dipping regarding federal tax benefits. Any expenses you use to generate the Lifetime Learning Tax Credit cannot be included in qualified expenses to justify a tax-free 529 plan withdrawal. For example, students who receive the full $2,000 tax credit must subtract $10,000 from their total 529 plan qualified expenses.
Final Thoughts
This expansion marks a turning point for 529 plans, broadening their usefulness beyond traditional college and toward lifelong learning. Whether you’re a working professional, a trade student, or a parent with leftover funds, 529 plans now offer more flexibility than ever to support your education goals.
