Trump's bill changed 529 plans. How does it compare to Trump Accounts?

• The Trump-backed reconciliation bill passed in July 2025.
• The 'One Big Beautiful Bill Act' made Trump Accounts and expanded qualified expenses for 529 plans.

Trump Accounts will begin launching on July 4, and some parents may be wondering how those compare to 529 Plans.

A 529 plan is a tax-advantaged savings plan designed to be used for education expenses. The upcoming Trump Accounts are also savings accounts, and funds can be distributed after the owner turns 18 without an additional tax penalty for limited expenses, including higher education expenses.

Millions of families have already signed up for the Trump Accounts. They were created in the 2025 tax and policy legislation, backed by President Donald Trump, known as the "One Big Beautiful Bill Act" signed into law last summer.

That legislation also made changes to 529 plans. Here is what to know:

What changes did Trump make to the 529 plans?

The One Big Beautiful Bill Act expanded the ways that 529 plans can be used.

Funds from 529 plans can now also be used for K-12 education expenses beyond tuition, including standardized test fees, educational therapies and more. The limit for withdrawals for K-12 education expenses also increased from $10,000 to $20,000 per year.

The law also allows families to use funds from 529 plans for qualified postsecondary credentialing expenses, meaning parents can use funds for their own professional development expenses, according to Chase.

Some withdrawals could still be taxed at the state level, however. Check your state's tax plans at College Savings Plans Network.

529 plans alternative to upcoming Trump Accounts

Also a part of the One Big Beautiful Bill Act, Trump Accounts function as IRA accounts for kids. Anyone under 18 years old is eligible for an account, but only kids born between 2025 and 2028 will get a $1,000 seed payment from the government. It is owned by the child but administered by the parent until the child turns 18.

At that point, the Trump Accounts function like an IRA, which penalizes withdrawals before the age of 59½. One exception to that, however, is qualified higher education expenses.

For newborn parents planning to save for their kids' future education, they may be choosing where to invest their own money. A comparison by J.P.Morgan Asset Management shows advantages to investing in a 529 plan include greater flexibility, higher contribution limits and paying less in taxes upon withdrawal. However, 529 plans also come with their own limitations and drawbacks, USA TODAY previously reported.

Contributing: Daniel de Visé, Medora Lee, USA TODAY

Kinsey Crowley is the Trump Connect reporter for the USA TODAY Network. Reach her at [email protected]. Follow her onX (Twitter),Threads,Bluesky andTikTok.