Details of Public Law 119-21, section 70413 , One Big Beautiful Bill Act

The provision expands the type of expenses eligible for an IRC section 529 distribution. Under the Tax Cuts and Jobs Act (Public Law 115-97, section 11032), a distribution was previously limited to tuition expenses in connection with the enrollment or attendance of the designated beneficiary at a public, private, or religious elementary or secondary school. Under the provision, in addition to tuition expenses, qualified higher education expenses, for an elementary or secondary private, public, or religious school, also includes expenses for curriculum and curricular materials, books or other instruction materials, online educational materials, tuition for specified tutoring or educational classes, fees for specified examinations, fees for dual enrollment in an institution of higher education, and specified educational therapies for students with disabilities.

The provision increases the IRC section 529 plan distribution limit from $10,000 to $20,000, for eligible expenses incurred during the taxable year in connection with the enrollment or attendance of the designated beneficiary at a public, private or religious elementary or secondary school. This limitation applies on a per-student basis, rather than a per-account basis.

California law, under the PITL and the CTL, conforms to IRC section 529, relating to qualified tuition programs, as of the specified date of January 1, 2025, with modifications, and does not conform to IRC section 529 account funding for elementary and secondary education. As a result, CA does not conform to the provision’s new federal rules relating to expanded qualified expenses or to the increased maximum distribution amount.