Families can use up to $20,000 per student per year from a 529 savings plan to pay for elementary or secondary school in 2026, according to an IRS webinar on the tax changes in President Trump’s 2025 tax law. Richard Furlong, a senior stakeholder liaison at the agency, told viewers that the maximum amount of 529 funds that can go toward K-12 enrollment “increases to $20,000 per student per year.” The IRS posted the full transcript on its newsroom page.
The change matters most to families who already hold a 529 account, including grandparents who opened one for a grandchild. Anyone with a balance in a plan and a child or grandchild in private or parochial school can now look at 2026 tuition bills with a higher ceiling in mind. The question for those households is how to set up the withdrawal paperwork and the household budget around it before the next tuition payment comes due.
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What does the IRS say about the $20,000 limit?
The webinar is titled “Understanding the One Big Beautiful Bill: Individual Tax Provisions,” and the transcript refers to the law as Public Law 119-21. The IRS now brands the same legislation the Working Families Tax Cuts, which is the name on the newsroom page. Furlong says the changes begin in 2026.
The figure is a cap on how much can be taken out of 529 plans for elementary and secondary school costs each year for each student. It is not a promise that any family can withdraw that amount. A 529 account can only pay out what has been saved in it, and the cap applies student by student.
Kenji Chavez moderated the session, and Furlong presented the individual provisions one by one. The transcript is undated on the IRS page, but it describes the changes as starting in 2026, which is why the $20,000 ceiling applies to this school year’s bills.
Which other education costs did the law add?
The same section of the webinar widens what a 529 can pay for beyond school tuition. Furlong says the definition of qualified higher education expenses now includes “qualified post-secondary credentialing expenses,” along with other education costs that qualify for tax-free 529 distributions. The wording extends the list of qualifying costs to credentialing programs.
The IRS has separate sections in Publication 970, its guide to education tax benefits, for “Qualified Elementary and Secondary Education Expenses” and “Qualified Postsecondary Credentialing Expenses.” The edition posted on IRS.gov is Publication 970 for 2025, prepared for 2025 returns.
Is more IRS guidance coming?
Yes. Furlong notes during the webinar that IRS guidance on the new provisions is expected later in the year. Until it arrives, the transcript is the clearest statement of the $20,000 figure from the agency itself, and families weighing a large withdrawal can look to their plan administrator for the rules that govern their own account.
What else belongs in the household plan?
Before the next tuition payment, a family can list each student’s school, the 2026 billing dates and the current 529 balance, then ask the plan administrator how it processes K-12 withdrawals and whether the money goes to the family or straight to the school. Those answers decide how much paperwork each payment takes.
School costs sit alongside everything else a fixed income has to cover: Medicare premiums, utilities, groceries and property taxes. Setting up a 529 withdrawal is one item on that list. The other line items often have their own programs, most of which require an application and have income limits that change each year.
The same webinar also walks through the enhanced senior deduction, no tax on tips, no tax on overtime and the car loan interest deduction, so households with older members may find the 529 change is only one of several to sort out. For a family deciding how to spread a 529 balance across several years of tuition, the next round of IRS guidance is the document to watch.
Paying school costs on a fixed income and wondering what else helps?
A 529 withdrawal covers only the school bill. The Benefits Checklist does not cover 529 plans; it covers the rest of a household budget, where programs for medicine, food, heating and property taxes go unused because no one tells people to apply.
The Benefits Checklist scans 11 benefit programs, lists the 2026 income limits and includes a 50-state phone directory, plus a 10-minute scan in Part 1 that comes with a printable application tracker in the download.
Run the Benefits Checklist’s 10-minute scan of 11 programs before the next tuition bill →
More Financial Reading
- 21 Ways to Stretch a $2,087 Social Security Check
- 15 Places to Find Your Share of the $4.25 Billion States Give Back
- The New $6,000 Senior Deduction and 14 More Tax Moves for Retirees
This article was produced with AI assistance and edited for accuracy against the sources linked above.
