Bill Summary
H.R. 939, the “Student Empowerment Act,” would expand how families can use tax-advantaged 529 education savings plans for kindergarten through 12th grade (K–12) costs. Under current federal law, 529 plan earnings are exempt from federal income tax if withdrawals are used for “qualified higher education expenses.” Since 2017, Congress has also allowed up to $10,000 per year per student for K–12 tuition. This bill goes significantly further by rewriting Section 529(c)(7) to broaden what counts as a qualified expense for elementary and secondary education and to explicitly include homeschool expenses.
The bill lists a wide range of K–12 costs that would be treated as qualified expenses for 529 purposes “in connection with enrollment or attendance at,” or for students enrolled at or attending, an elementary or secondary public, private, or religious school. Those newly qualifying expenses would include: tuition; curriculum and curricular materials; books and other instructional materials; online educational materials; tuition for tutoring or educational classes outside the home (if the tutor is unrelated to the student and is a licensed teacher, has taught at an eligible educational institution, or is a subject matter expert in the subject); fees for standardized national tests, AP exams, and college-admissions exams; fees for dual enrollment in a higher education institution; and educational therapies for students with disabilities provided by licensed or accredited professionals, including occupational, behavioral, physical, and speech-language therapies. The bill also clarifies that these categories apply to homeschool students, regardless of whether the state treats a homeschool as a homeschool or as a private school under state law.
A notable policy point is that the bill replaces the existing subsection of the tax code that currently governs K–12 529 uses. Under present law, the code caps K–12 tuition withdrawals at $10,000 per year per beneficiary. The replacement text in H.R. 939 enumerates expanded K–12 expense categories but does not restate that $10,000 annual cap. As written, that appears to remove the federal cap for K–12 withdrawals, potentially allowing unlimited tax-free 529 withdrawals for the listed K–12 expenses. If Congress intends to keep a cap, it is not apparent in this draft’s amended subsection; the ultimate effect would depend on the final statutory text and any other cross-references in the code.
Pros
- Expanded coverage for educational therapies for students with disabilities could directly support families who face high out-of-pocket costs for occupational, behavioral, physical, or speech-language services.
- Including fees for dual enrollment and standardized tests can lower barriers for students to earn early college credit and to access college admissions, potentially aiding college readiness.
- Allowing tutoring and educational classes—with quality guardrails for tutor qualifications—could help close learning gaps that widened during the pandemic.
- Coverage of curriculum, books, and online materials acknowledges the reality of blended and digital learning, which can support individualized instruction.
- Public school families can also benefit (e.g., test fees, dual enrollment, certain materials), not just private or homeschool families.
- Simplifying 529 rules to cover a fuller spectrum of legitimate K–12 learning expenses may reduce confusion and administrative burdens for families and plan administrators.
- If implemented with strong definitions and documentation standards, it could improve equity for students with disabilities irrespective of school type.
- Strengthens school choice by letting parents direct more of their own tax-advantaged savings to the educational environments and services they believe are best for their children, including homeschooling.
- Cuts red tape by clearly recognizing common, legitimate K–12 expenses—curriculum, online materials, tutoring, test fees—as qualified, reducing uncertainty for families and plan providers.
- Potentially removes the $10,000 cap on K–12 withdrawals (based on the replacement language), giving families true flexibility over their savings and reducing federal micromanagement.
- Supports students with disabilities by explicitly covering therapies from licensed or accredited providers—an important inclusion for parental empowerment and tailored interventions.
- Encourages academic acceleration and workforce readiness by covering dual-enrollment fees and standardized testing, helping students graduate with college credits and lower future costs.
- Neutral with respect to school sector—public, private, or religious—so parents, not bureaucracies, decide how funds are used.
- Respects homeschooling by acknowledging curricula and materials as legitimate expenses across diverse state legal frameworks.
- Provides tax relief to families facing rising K–12 costs without creating a new federal program or bureaucracy.
Cons
- Likely regressivity: 529 plans are disproportionately used by higher-income households, so expanding qualified uses risks delivering the largest benefits to families already able to save, rather than targeting relief to lower-income families.
- By replacing the current statutory language without restating the $10,000 annual cap, the bill appears to allow unlimited K–12 withdrawals, which could significantly expand a tax shelter and reduce federal revenues without progressive targeting.
- Public dollars (via tax expenditures) would further subsidize private and religious school expenses, potentially accelerating flight from public schools and undermining public education systems.
- Homeschool and curriculum spending are difficult to verify and audit for appropriate educational use, increasing risks of misuse, fraud, and inequity.
- The “subject matter expert” standard for tutors is vague and may be hard for the IRS and families to administer consistently, creating compliance gray areas.
- Expanding tax-preferred uses to many K–12 items blurs the 529 plan’s original purpose—college savings—and could lead some families to deplete funds before postsecondary education, exacerbating future college affordability challenges.
- State nonconformity could create confusion and unexpected state tax liabilities, with more complexity borne by families least able to afford professional tax advice.
- This approach relies on tax expenditures rather than direct appropriations, bypassing accountability, equity safeguards, and public-school support mechanisms Democrats often prefer.
- Some fiscal conservatives may balk at the potential revenue loss and expansion of a tax preference without offsetting cuts or broader tax reform.
- New definitions (e.g., tutor qualifications, “subject matter expert”) could introduce compliance burdens and ambiguity, inviting IRS oversight into family education decisions.
- Because 529 participation is uneven, the policy’s benefits may not reach many working-class families who lack disposable income for savings, limiting the bill’s populist appeal.
- If states do not conform, families could face state tax recapture or lose state deductions, diminishing the law’s value and creating a patchwork of rules.
- Expanding K–12 uses might reduce savings available for college, undercutting the long-term goal of self-reliance in paying postsecondary costs.
- The bill leaves room for interpretive disputes (e.g., what counts as “online educational materials”), possibly requiring future guidance or amendments.
- Opponents could frame this as favoring private and religious schools, inviting political fights that could complicate broader education choice agendas.
This bill was introduced on February 04, 2025 in the House.
View on Congress.gov:
https://www.congress.gov/bill/119th-congress/house-bill/939
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Feb 04, 2025
Referred to the House Committee on Ways and Means.
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Feb 04, 2025
Introduced in House
Intro-H
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Feb 04, 2025
Introduced in House
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This bill has not yet been enacted into law.
Sponsors
OK District 1
Republican
Policy Area: Taxation