Most people think of 529 plans as college savings tools. However, under a proposal in the House’s new budget reconciliation bill, dubbed the “One Big, Beautiful Bill,” these tax-advantaged accounts could soon be used to pay for more than just traditional higher education.
The legislation aims to expand the list of qualified 529 expenses to include a broader range of workforce training costs that aren’t currently eligible 529 expenses. This includes tuition, fees, books, supplies, and the costs of required exams associated with professional credentials and continuing education.
While the bill is not yet law, it’s moving forward under the budget reconciliation process, meaning it only needs a simple majority to pass in the Senate. If it becomes law, families and working professionals could soon have new opportunities to use their 529 funds for career development.
Here’s what you need to know about what qualifies, how it compares to current rules, and how to plan for the potential upcoming changes.
What could be covered under the proposed expansion?
If the bill becomes law, 529 plan owners could use their funds for a much broader range of education and training costs. Here are examples of what may qualify:
- Workforce training programs listed under WIOA include vocational and technical programs, such as HVAC certification, welding apprenticeships, EMT training, and more.
- Programs in the VA’s WEAMS directory: GI Bill-approved credential programs like aviation maintenance, cybersecurity, and project management.
- Preparation and exam fees for industry-recognized licenses or certifications, including CPA exam prep courses and testing fees, bar exam review and registration costs, commercial Driver’s License (CDL) training, and certifications in skilled trades such as plumbing, electrical work, or cosmetology
- Credentials approved by the Treasury and Department of Labor: Any professional or vocational training programs designated through collaboration between the U.S. Treasury and Labor departments, even if not on a preexisting list.
- Required continuing education (CE) fees to maintain a credential, such as CE courses for nurses, social workers, or financial advisors, and state-mandated renewal training for teachers, real estate agents, or accountants
In practical terms, this expansion could make a wide range of job-training expenses eligible for tax-free withdrawals. A nurse’s CE credits, a plumber’s license renewal, or an aviation-tech certification course could all be covered if the legislation passes.
What would remain ineligible?
The expansion is targeted and only includes certain types of educational expenses. Recreational courses or voluntary career development sessions without an official credential wouldn’t qualify.
Moreover, even if the federal law changes, state tax treatment may not update automatically, and income-based credits or deductions may still have separate rules.
Why this matters for families and professionals
Allowing credentials and CE to qualify under 529 rules would make the accounts far more flexible:
- People without college degrees but earning credentials can still benefit from tax-advantaged growth.
- Families uncertain about college paths can use their 529 for career-oriented training instead.
- Unused balances are easier to redirect toward adult education without penalty.
How to plan now
Since everything is still proposed, here are practical steps to prepare:
- Stay updated – Track Senate progress and final language of the bill.
- Verify your program – Check WIOA and WEAMS lists before budgeting.
- Review your state’s rules – You may qualify federally, but still face state taxes.
- Consider delaying withdrawals – If you’re targeting a credential now, consider waiting until the law is final to avoid unexpected taxes or penalties.
Final thoughts
If passed, this expansion would transform 529 plans into accurate career-preparation accounts, not just college savings accounts. Expect broader flexibility for workforce education, licensing, and credential upkeep. It also signals a shift in policy recognition that postsecondary certificates and lifelong learning increasingly shape career paths.
For now, the proposal remains just that proposed. However, for families, professionals, and financial advisers asking “what if,” it’s a clear sign to pay attention: 529 funds may soon support more than just college expenses.
