General Education

The Big Beautiful Bill & 529 Plans: What It Means for Tutoring Expenses

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TL;DR

Estimated Read Time: 5–6 minutes
The “Big Beautiful Bill,” signed into law on July 4, 2025, significantly expands how families can use 529 education savings plans, including for tutoring services. Tutoring companies now have new growth opportunities by aligning with updated federal guidelines. The tax benefits of 529 Plans have been discussed ad nauseam, so we’ll stick to the impact on tutoring in this article.

What Is the Big Beautiful Bill?

Officially titled the One Big Beautiful Bill Act, this legislation modernizes the 529 education savings plan. It broadens what families can pay for using tax-free savings. These changes support a wider range of educational paths, including tutoring, test prep, and career credentialing.

Major Changes to 529 Plans in 2025

Broader Qualified Expenses for K–12

Previously, families could use up to $10,000 per year for K–12 tuition only. Now, beginning July 4, 2025, families can use 529 savings for many additional educational expenses, such as:

Textbooks and curriculum
Online learning platforms
Educational therapy
Tutoring services
Dual-enrollment fees
Standardized test fees and prep (SAT/ACT)

These expanded uses are confirmed by my529, Kiplinger, and BestColleges.

Higher Annual Withdrawal Limits

Beginning in the 2026 tax year, the annual tax-free limit for K–12 educational expenses increases to $20,000 per student. This is a significant rise from the previous $10,000 limit.

Details on the increase were reported by The Week and Kiplinger.

Postsecondary and Career Training Flexibility

Families can now use 529 funds for a wider variety of educational opportunities after high school. These include:

Trade and vocational schools
Certification or credentialing programs
Workforce training and apprenticeships
Exams and related fees (such as professional licensing)

This flexibility is confirmed by Forbes, Saving For College, and the Wall Street Journal.

Why This Matters for Tutoring Companies

These updates create a major opportunity for tutoring businesses. This is especially true for those offering:

Test prep for SAT, ACT, or AP
Academic tutoring
Dual-enrollment course support
Learning recovery or enrichment

According to my529, families can use 529 funds for tutoring services. To qualify, tutoring must meet the following requirements:

The tutor is a licensed educator or verified subject-matter expert
The tutor is not related to the student
Services must be academic in nature

Tutoring businesses that meet these guidelines can position themselves as 529-compliant and more accessible to families using education savings plans.

How Tutoring Businesses Can Take Advantage

1. Clarify Eligibility

Make sure your services meet IRS guidelines for qualified tutoring. That includes:

Employing appropriately credentialed instructors
Offering academic support, not extracurriculars
Keeping clear documentation for families

More information is available from Forbes and Kiplinger.

2. Educate Your Clients

Many parents are not aware of these changes. Help them understand that:

They can now use 529 plans to pay for tutoring and test prep
They may spend up to $20,000 per year on K–12 services starting in 2026
The new rules are already in effect for many services, even in 2025

3. Highlight the Timeline

The expansion of qualified expenses began in July 2025. The increased $20,000 withdrawal limit will apply starting in 2026. Be clear about what families can do now and what they can plan for next year.

4. Monitor State Rules

Although the law is federal, states may apply their own rules. Some states may:

Limit which K–12 expenses qualify
Require documentation or pre-approval
Recapture tax benefits for certain withdrawals

Stay up to date using your state’s department of education or tax agency. The Wall Street Journal covers this risk in more detail.

In Summary

The One Big Beautiful Bill Act has redefined how families can use 529 funds:

Tutoring, test prep, and curriculum are now eligible
The K–12 withdrawal limit increases to $20,000 per student per year starting in 2026
Tutoring businesses that meet the guidelines can attract more clients
Educating families is key to unlocking this potential

Now is the time to align your services, language, and marketing to reflect these changes. Families are looking for support. This bill gives them new ways to afford it.

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