Thanks to H.R.1, better known as the “One Big Beautiful Bill Act,” the use of funds from 529 plans has been expanded to benefit homeschoolers!
529 Plans
If you’re unfamiliar with 529 plans, they are a tax-advantaged savings account designed to help families save for education costs, such as college, K-12 tuition, and now homeschooling! For those with long-term savings goals, the money you contribute gets invested and grows tax-free, and withdrawals for qualified education expenses are tax-free. While contributions aren’t deductible on your federal return, many states, including Pennsylvania, provide credits & deductions on your state income tax return for contributions.
529 Plans by State
If you’re curious about which states offer tax benefits for 529 plans, check out this interactive spreadsheet and map.
New changes
Thanks to H.R.1, homeschoolers can now use distributions taken after 7/4/25 for:
- Curriculum and curricular materials
- Books or other instructional materials
- Online educational materials
- Fees for standardized tests
Savings:
If you’re in PA, you can essentially get a 3% discount on your homeschooling curriculum. So for a family spending $3,600 a year, that would result in ~$110 of state tax savings. Depending on your home state, it may be even more savings!
How Can You Take Advantage?
- Open up 529 accounts with the appropriate state (check the map to see if your state allows any 529 plan, or only in-state plans).
- You will want to open up an account for each of your children.
- Make your initial deposits into each account.
- If you want, setup automatic transfers each month to continuously fund the accounts.
- Choose the investments that your deposits will go into
- Once funds have been in the account for the appropriate amount of time, they can be withdrawn to use towards qualifying expenses (Note: in PA this is 7 days; please check with your 529 plan on their rules).
- Be sure to always save copies of receipts to substantiate the use of the funds for qualified education purposes
- Be sure to provide your tax advisor with a year-end statement from your 529 plan showing contributions you made during the year
Something to Watch:
Starting in 2027, section 70411 of H.R.1 establishes a tax credit, up to $1,700, for cash gifts to approved K-12 Scholarship-granting organizations. While the text of H.R.1 does not specifically mention homeschoolers, given the new favorability towards using 529 funds, some experts are anticipating homeschooling organizations will be eligible to receive these gifts and grant scholarships. This would give parents the ability to receive tax credits, and students a new source of scholarships to apply for. We are still waiting for final regulations from Treasury on this credit, but I’ll definitely be keeping my eye on this!
Final Thought
Hopefully these new 529 plan benefits will help you and your family stretch your education dollars further while staying tax smart. Keep an eye out for future updates on the 2027 scholarship credit, but in the meantime, get started opening & funding your 529 accounts now. It is a simple step that can pay off in a big way!
