Increased Tax Relief for K-12 Tuition via 529 Education Savings Plans
This act raises the maximum amount that can be withdrawn tax-free from qualified tuition programs (529 Plans) and used for elementary and secondary school tuition, increasing the limit from $10,000 to $12,000 annually. Crucially, it introduces an annual inflation adjustment mechanism for this new limit, ensuring the benefit keeps pace with rising costs. These changes apply to tax years beginning after December 31, 2022, providing greater financial flexibility for families utilizing private education options.
Key points
The annual limit for 529 Plan distributions used for K-12 tuition is increased from $10,000 to $12,000.
An inflation adjustment mechanism is added, meaning the $12,000 limit will increase annually based on the cost-of-living adjustment starting in 2024.
The changes are effective for tax years beginning after December 31, 2022, offering immediate relief to savers.
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