Great News for Families: 529 Plans Now Cover Tutoring and Test Prep!
We’re excited to share an important update that can make a real difference for families planning their educational journeys. With the newly signed “One Big Beautiful Bill Act,” 529 college savings plans now offer expanded benefits—including coverage for tutoring and test preparation services!
What’s Changed?
As of July 4, 2025, families can use their 529 plan funds tax-free for a wider range of K-12 educational expenses, such as:
- Tutoring services (not just tuition)
- Standardized test fees (SAT, ACT, AP exams)
- Test prep classes and materials
- Curriculum materials, books, and online educational resources
- Educational therapies for students with disabilities
And there’s more good news: you can withdraw up to $20,000 per year for these expanded K-12 expenses!
When Can You Start?
These new benefits are available for distributions made after July 4, 2025, so you can use your 529 funds for tutoring and test prep starting with the 2025–2026 school year.
| Expense Type | Covered Under New Law? | Effective Date |
|---|---|---|
| K-12 Tuition | Yes | Already allowed |
| Tutoring (K-12) | Yes | July 4, 2025 onward |
| Test Prep (SAT, ACT) | Yes | July 4, 2025 onward |
| Homeschool Materials | Yes | July 4, 2025 onward |
| Educational Therapies | Yes | July 4, 2025 onward |
Please check with your accountant for advice on how these changes affect you personally. Also, check your state’s 529 plan administrator, as some states may need to update their rules to match the new federal law.
Helpful Tips
- Check State Rules: While the federal law is now in effect, some states may take a little time to update their own regulations.
- Save Your Receipts: Keep documentation for all tutoring and test prep expenses paid with 529 funds in case you need them for tax or state purposes.
We’re Here to Help!
If you have questions about how these changes can benefit your family, or if you’re ready to use your 529 funds for test prep, reach out to Woodlands Test Prep. We’re committed to helping students achieve their educational goals—and now, your 529 plan can help too!
Let’s make the most of these new opportunities together!
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