With graduation season upon us, conversations about education and its cost are naturally front of mind. Whether you are watching a child walk across a stage this spring or beginning to think seriously about what lies ahead for a younger family member, the question of how to fund education thoughtfully and tax-efficiently deserves more than a passing glance. The 529 plan remains a versatile education savings tool, and recent legislative changes have made it considerably more flexible than many families realize.
What Has Changed with 529 Plans That You Should Know About?
The 529 plan landscape has undergone meaningful transformation over the past two years, and families who established their strategy even a few years ago may benefit from revisiting it with fresh eyes. The One Big Beautiful Bill Act, signed into law in July 2025, significantly broadened the definition of qualified expenses to include curriculum materials, tutoring, standardized test fees, dual enrollment costs, and educational therapies for students with disabilities, while also expanding eligibility to cover vocational training programs, professional credentialing, and a wide range of skilled certifications.
Perhaps the most practical update for families with younger children is the doubling of the annual K-12 withdrawal limit from $10,000 to $20,000 per student, effective January 2026, which meaningfully increases the plan’s utility during the pre-college years. Taken together, these changes may reduce the primary concern that has historically made some families hesitant to fund 529 accounts aggressively, which is the concern that unused dollars could remain trapped with limited options for redirection.
Are You Taking Full Advantage of the Tax Benefits Available to You?
529 plans do not offer a federal income tax deduction on contributions, but many states provide a state income tax deduction or credit for contributions made to their sponsored plan. If you are contributing to an out-of-state plan without first evaluating your home state’s benefits, you may be leaving a straightforward tax advantage unclaimed.
On the growth side, assets inside a 529 plan grow free of federal income tax, and qualified withdrawals are also tax-free. For high-income families in the 32, 35, or 37 percent federal brackets, that tax-free compounding may be a meaningful advantage over a taxable brokerage account used for the same purpose.
What Counts as a Qualified Expense, and Has That Expanded?
Many families may be unaware of how broadly qualified expenses are now defined. Tuition and fees remain the core use case, but 529 funds can also be used for room and board, required textbooks and supplies, computers and related technology used for school, and in many cases off-campus housing up to the cost of on-campus housing. Beginning in 2026, K-12 tuition at public, private, or religious schools is a qualified expense up to $20,000 per student per year, up from the prior $10,000 limit.
How Should High-Income Families Think About Contribution Strategy?
For those with the capacity to do so, superfunding a 529 plan may be a strategy worth consideration. The IRS allows individuals to front-load five years of annual gift tax exclusion contributions into a 529 in a single year, with an individual able to contribute up to $95,000 per beneficiary in 2026 or $190,000 for a married couple contributing jointly, without triggering federal gift tax, provided no additional gifts are made to that beneficiary during the five-year period.
This approach may be particularly useful for grandparents looking to reduce the size of a taxable estate while directing assets toward a family legacy goal. It may also be worth exploring for business owners or executives who experience a high-income year and wish to deploy capital in a tax-advantaged direction.
Is Your 529 Integrated With the Rest of Your Financial Plan?
A 529 account opened years ago and funded on autopilot may no longer reflect your family’s actual situation, your investment time horizon, or the broader allocation across your financial life. As children approach college age, the investment allocation inside the plan should shift accordingly, and the account should be evaluated alongside your income, tax picture, and estate planning goals.
At DecisionMap Wealth Management, we work with clients to help make their education savings strategy deliberate, coordinated, and fully integrated with their broader wealth plan. If you have not revisited your 529 in the past year or are approaching a major education milestone, we invite you to reach out to our team to discuss whether your current strategy still reflects where your family is headed.