Tax relief: 529 plans can now cover child care expenses for young children.
This law allows families to use funds saved in 529 education savings accounts, traditionally meant for college, to cover child care expenses for children under the age of five. Withdrawals from these plans for qualified early child care will be exempt from federal income tax. This change aims to significantly reduce the financial burden of early education and child care for families.
Key points
Funds from 529 savings plans can now be used tax-free to pay for qualified child care services for children up to 5 years old.
Qualified child care must be provided by licensed, regulated, or registered providers, excluding individuals related to all children receiving care.
The changes apply to expenses paid or incurred after the law is enacted, providing immediate financial relief.
Status:
Introduced
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