The 529 Education Revolution Is Here
Tax-free accounts have become more powerful, but some states are resisting.
A quiet revolution is under way in education policy. On the heels of the rapid spread of education savings accounts at the state level, Congress has made federal policy far more favorable for all types of education: foundational, postsecondary, workforce development and lifelong learning.
By expanding 529 accounts significantly, the One Big Beautiful Bill Act created a new template for education supporting students and parental choice. This new law also tees up battles in states where the status quo isn’t working for the bottom half of the economic ladder.
Like Roth IRAs, 529s let account holders invest after-tax money in stock and bond funds, with income and qualified withdrawals free of federal taxes. For the first two decades after Congress created 529s, the accounts could be used only for higher education. That changed in 2017, when Congress expanded 529s to include K-12 tuition in the Tax Cuts and Jobs Act. Since then, 529s have surged in popularity, with more than $500 billion now invested in more than 17 million accounts.
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