Tax Tips

For years, these accounts have been straightforward college savings vehicles: contributions grow tax-free, and withdrawals for qualified education expenses aren’t taxed. Tuition, room and board, maybe some books.

That’s all changed.

Recent federal legislation, specifically the SECURE 2.0 Act and the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, has transformed 529 plans into something far more flexible. They’re no longer just college savings vehicles. They’re now tools for K–12 education, skilled trades, and professional certifications.

When reviewing a 529 plan, it’s important to consider not only the state tax treatment but also any associated fees and expenses. Availability of a state tax deduction will depend on your state of residence, as state tax laws and treatment may vary from federal tax laws. If you make a non-qualified distribution for something other than school-related expenses, earnings will be subject to income tax and a 10% federal penalty tax.

K–12 Education: Double the Flexibility

Starting with the 2026 tax year, the annual withdrawal limit for K–12 expenses doubles from $10,000 to $20,000 per student. But the OBBBA also broadened the definition of a “qualified expense” for younger students. We can now use 529 funds for:

• Tutoring services from licensed teachers or subject-matter experts
• Curriculum materials, including textbooks, workbooks, and online learning platforms
• Standardized testing fees for the SAT, ACT, AP exams, and other college entrance assessments
• Educational therapies for students with disabilities, such as occupational therapy or speech services
• Dual-enrollment tuition for college courses taken during high school

This expansion gives parents support well before the first college bill arrives.

Skilled Trades and Professional Credentials

Not every career path runs through a four-year university, and the new rules acknowledge that. The 529 now covers training and certification programs for skilled trades and professional licensing.

Qualified expenses include tuition, books, equipment, and exam fees for programs like:

• Commercial driver’s license (CDL) training
• HVAC, plumbing, electrical work, welding, or cosmetology
• Aviation mechanics and other technical certifications

This change reflects a growing recognition of vocational and technical education. If your child is drawn to the skilled trades or needs continuing education to maintain a professional credential, a 529 can help .

The 529-to-Roth IRA Rollover

One of the longstanding concerns we’ve heard about 529 plans has been the risk of overfunding. What happens if your child doesn’t go to college, or doesn’t use all the money we’ve saved?

The SECURE 2.0 Act addressed this by allowing up to $35,000 in unused 529 funds to be rolled over into a Roth IRA for the beneficiary—tax-free and penalty-free. The account must have been open for at least 15 years, and rollovers are subject to annual Roth IRA contribution limits ($7,500 in 2026). Contributions made within the last five years (and their earnings) aren’t eligible. Also, the original Roth IRA owner is not required to take minimum annual withdrawals.

This provision helps address some of the downside risk of saving too much. If your child receives scholarships, chooses a less expensive school, or takes a different path entirely, those unused funds can be moved.

Permanent Support for Families with Disabilities

The OBBBA also made permanent the ability to roll 529 funds into an ABLE account—a tax-advantaged savings vehicle for individuals with disabilities. Previously, this option was temporary. Now, families have ongoing flexibility to redirect education savings toward long-term care and quality-of-life expenses if a child doesn’t pursue traditional education.

What This Might Mean for Your Family

These changes are designed to make 529 plans more versatile than ever before. A 529 might be worth evaluating whether you’re saving for a private elementary school, a vocational certification, or a four-year degree:

• State tax rules vary. While the federal rules have expanded, your state may take time to align its own tax policy with the new $20,000 K-12 limit. Check with your tax, legal, and accounting professionals to see how the new 529 may apply in your situation.
• Superfunding still works. For 2026, you can contribute up to $95,000 in a single year ($19,000 annual gift exclusion × 5 years) without triggering gift tax consequences. Another strategy to review with your tax, legal, and accounting professionals, especially if you believe that’s a possibility for your family.

Aim for flexibility. If you’re not sure which education path your child will take, the expanded rules give you some more factors to consider.

^{Sources (Used throughout) 
One Big Beautiful Bill Act (Public Law 119-21), July 2025
SECURE 2.0 Act of 2022 (Section 126), December 29, 2022
IRS Notice 2025-57, October 21, 2025} 

The Internal Revenue Service (IRS) shared guidelines for tax pros to protect taxpayer data, but these principles are sound for everyone to follow.

Antivirus software: This software scans computer files for malicious software (malware) on the device. Antivirus vendors find new issues and update malware daily. Always install the latest software updates on your computer.

Two-factor authentication: This adds an extra layer of protection beyond just a password. Not only do you enter your username and password, but you also enter a security code that the service provider can send to another device for extra protection.

Drive encryption: Encrypts sensitive data into unreadable code that unauthorized users cannot easily decipher, so only authorized users can access it.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁹

Footnotes And Sources

^{9. IRS.gov, December 4, 2025}

Paycheck checkups are a great practice when something happens in your life that may change your tax status, such as getting married or divorced, having a baby, getting a new job, or getting a raise or promotion. You can also adjust your withholding status if you want to change the tax withheld due to other circumstances.

Other factors can also be checked during your paycheck checkup, such as how much you contribute to your health insurance and retirement. These expenses can also impact your tax liability.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁸

Footnotes And Sources

^{8. IRS.gov November 28, 2025}

Can you deduct expenses such as gas, depreciation, and lease payments on your tax returns? If you are a business owner or self-employed individual, you may be able to. If you use your car for business and personal purposes, you may split the expenses and base the deductions on a portion of the mileage used for business.

There are two methods to calculate the car expenses you can deduct. The first method involves calculating and deducting expenses, including depreciation, lease payments, gas and oil, tires, repairs and tune-ups, insurance, and registration fees.

The second entails using the standard mileage rate, which is calculated to reflect gas and other factors. In 2021, the standard mileage rate is 56 cents per mile. Taxpayers who want to use the standard mileage rate for a car they own must use this method in the first year the vehicle is available for use in their business.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Footnotes And Sources

^{10. IRS.gov, January 22, 2026}

Here are a few facts about credits and deductions that can guide you through your year-round tax preparation:

• Taxable income is the amount remaining after someone subtracts eligible deductions from their adjusted gross income, including the standard deduction. Some taxpayers may itemize their deductions.
• The Tax Cuts and Jobs Act changed itemized deductions. In comparing these changes, many individuals accustomed to itemizing may find it more beneficial to take the standard deduction.
• Generally, if a taxpayer’s itemized deductions are more than their standard deduction, they should consider itemizing.

Taxpayers can subtract tax credits from the total amount of tax they owe. To claim a credit, taxpayers should keep records demonstrating their eligibility. Some tax credits include the child tax credit, the child and dependent care credit, the American opportunity credit or lifetime learning credit, and the earned income tax credit.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁸

Footnotes And Sources

^{8. IRS.gov, Jan 14, 2026}

These activities can be itemized as deductions if you have plans to sell or buy a home this summer or to donate some old items. Here are some examples:

If you are refinancing your home this summer, you can deduct some of your mortgage interest. However, there are some limits to these deductions. According to the IRS, the deduction is limited to interest paid on a loan secured by the taxpayer’s primary or secondary residence. When refinancing, you must use the loan to purchase, build, or substantially improve your primary or secondary residence.

If you buy a new home this summer, you can deduct mortgage insurance if you pay $750,000 in qualifying debt for a first and second home, or $375,000 when married and filing separately.

Summer is an ideal time to sort through your belongings and donate any unwanted clothes, furniture, or household goods. If you itemize the deductions and provide proof of the donations, these donations may qualify for a tax deduction.

In addition to donating items, you can deduct mileage on your vehicle for services performed for a qualifying charity.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov¹⁰

Footnotes And Sources

^{10. IRS.gov, November 3, 2025}

The IRS has made it easier to file your taxes. Forms now include electronic signature options, allowing tax professionals to conduct remote transactions.

To allow your tax professional to use the electronic signature option, you must fill out and submit Form 2848, Power of Attorney and Declaration of Representative. This form constitutes a written authorization appointing tax professionals to represent taxpayers before the IRS, including performing certain acts on the taxpayer’s behalf. These acts may include providing an electronic signature.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁹

Footnotes And Sources

^{9. IRS.gov, August 27, 2025} 

Each year, the Internal Revenue Service takes a moment to remind active duty military personnel that the “IRS Free File” offers them multiple choices for free federal tax preparation.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁸

Footnotes And Sources

^{8. military.com, January 26, 2025}

Are you expecting a little extra cash from a sale? The IRS would like to know. Individuals, corporations, and partnerships engaged in a trade or business must report cash transactions of more than $10,000.

These cash payments can include jewelry sales, an overseas purchase, or any other cash transaction. You also need to report cash payments received in one lump sum, in two or more related payments within 24 hours, or as part of a single transaction or two or more transactions in the last year.

File Form 8300, titled Report of Cash Payments Over $10,000 Received in a Trade or Business. This form requires information about the benefactor and the recipient of the cash, a description of the transaction, and information about any other parties involved.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁹

Footnotes And Sources

^{9. IRS.gov, January 17, 2025} 

Natural disasters, such as hurricanes, earthquakes, or wildfires, can occur at any time, so preparing before disaster strikes is essential. Here are a few tips to help you prepare in case anything happens:

• Update Your Family’s Emergency Strategy: These can include knowing where to go, where you keep all necessary documents and possessions, and what you need to be prepared for. Check these regularly, as circumstances can change.
• Create Digital Copies of Important Documents: Most financial organizations, such as banks and insurance companies, provide digital copies of bank statements, tax returns, and insurance policies anyway, and keeping all these digital copies saved and organized is an excellent practice to get into. If you only have paper copies of important documents, scan them and store them securely for emergency access.
• Document Valuables: Documenting valuables makes it easier to claim insurance and tax benefits after a natural disaster. A disaster loss workbook will help you compile a list of belongings and photographs that can make this process even more accessible for both the IRS and your insurance provider.

These tips may help you have everything you need ready in the case of a natural disaster or other emergency.

This information is not a substitute for individualized tax advice. Please consult with a qualified tax professional to discuss your specific tax issues.

Tip adapted from IRS.gov⁸

Footnotes And Sources

^{8. IRS.gov, September 25, 2025}