Graphic from CryptoTaxAudit titled “OBBBA 529 Plan Changes: $20,000 Limit and New Expenses (2026).” Subtext reads: “OBBBA boosts the 529 K-12 annual limit to $20,000 in 2026, adds new eligible K-12 expenses, and expands 529 use for trade schools and licenses.” The image shows a pink piggy bank sitting on stacked books with a black graduation cap resting above it. Coins are dropping through a small metal funnel into the piggy bank. Next to it is a jar labeled “529 PLAN” filled with coins. To the left is a wooden toolbox containing tools including pliers and a wrench, with a yellow construction hard hat resting on top. A screwdriver lies on the table in front. The background appears like a study or library setting with warm lighting.

federal tax legislation tax planning Feb 18, 2026

OBBBA Increases 529 Plan Limits to $20,000 and Expands Eligible Expenses (2026)

President Trump signed the One Big, Beautiful Bill Act (OBBBA) into law on July 4, 2025.

The law makes several changes to 529 plans, affecting K-12 education (kindergarten through 12th grade), postsecondary training, and special needs accounts:

Change	What It Means
Credential training	529 funds now cover trade schools, apprenticeships, and professional licenses
Expanded K-12 expenses	Beyond tuition, now includes books, tutoring, online materials, and testing fees
Higher K-12 limit	$20,000 annual cap starting in 2026, up from $10,000
ABLE rollovers	Made permanent, previously set to expire in 2025

SECTION 1: 529 Plans Now Cover Trade Schools & Apprenticeships

Postsecondary Credentialing Expenses

OBBBA now allows 529 plan distributions for postsecondary credential costs. Postsecondary means post-high school.

Qualifying credentials include government-issued occupational and professional licenses, as well as certifications from recognized vocational schools, trade schools, or apprenticeship programs.

Examples of qualifying careers:

Cosmetologist or barber
Dental assistant
Electrician or plumber
Emergency medical technician (EMT)
HVAC technician
Nursing assistant
And many other licensed or certified careers

Qualifying expenses:

Expense Type	What's Covered
Tuition	Program tuition costs
Fees	Exam fees and continuing education fees
Materials	Books and supplies
Equipment	Equipment required for enrollment or attendance

SECTION 2: K-12 Limits Increase to $20,000 & Eligible Expenses Expand

Elementary and Secondary School Costs

Prior to OBBBA, 529 plan withdrawals for elementary or secondary school (K-12) covered tuition only - no other expenses qualified. The annual cap was $10,000, and it applied to religious, private, and public schools.

OBBBA significantly expands what you can pay for at elementary or secondary schools using 529 funds.

Previously limited to tuition only, you can now withdraw money for a much broader range of educational expenses:

Books and other instructional materials
Online educational materials
Tutoring or classes for education outside the home
Test fees and fees for dual enrollment programs

Starting in 2026, the annual withdrawal limit changes:

Previously limited to tuition only, you can now withdraw money for a much broader range of educational expenses:

Books and other instructional materials
Online educational materials
Tutoring or classes for education outside the home
Test fees and fees for dual enrollment programs

Time Period	Annual Limit
Through 2025	$10,000
2026 and after	$20,000

SECTION 3: OBBBA Makes 529-to-ABLE Account Rollovers Permanent

Rollovers from 529 Plans to ABLE Accounts

ABLE accounts are tax-advantaged accounts created by or for disabled individuals. Withdrawals qualify for tax-free treatment when covering qualifying disability-related expenses for the account beneficiary.

Tax-free rollovers from 529 plans to ABLE accounts were scheduled to end on December 31, 2025. OBBBA makes these rollovers permanent.

Planning Around 529 Changes

529 plans now offer more flexibility than ever, but the rules vary depending on your situation. If you're weighing whether to open an account, how much to contribute, or which expenses qualify for your family, talk to someone who can walk through your specific situation.

OBBBA Increases 529 Plan Limits to $20,000 and Expands Eligible Expenses (2026)

SECTION 1: 529 Plans Now Cover Trade Schools & Apprenticeships

SECTION 2: K-12 Limits Increase to $20,000 & Eligible Expenses Expand

SECTION 3: OBBBA Makes 529-to-ABLE Account Rollovers Permanent

Planning Around 529 Changes

Related Articles: The One Big, Beautiful Bill Act (OBBBA): What Changed for Your 2025 Taxes

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