Beginning this year, the tax-free 529 plan withdrawal limit for qualified elementary and secondary school expenses has doubled to $20,000 per year per beneficiary. Plan distributions used to pay qualified expenses are income-tax-free for federal purposes and potentially also for state purposes, making the tax deferral a permanent savings. The definition of qualified elementary and secondary school expenses also has expanded. After July 4, 2025, expenses such as books, instructional materials and certain fees qualify. (Previously, only tuition qualified.) Tax tip: Consider increasing 529 plan contributions so that funds are available to take advantage of the increased limit in the future.
