Freedom to Invest in Tomorrow’s Workforce Act

Bill Summary

H.R. 1151, the Freedom to Invest in Tomorrow’s Workforce Act, would expand the allowable uses of 529 education savings accounts to cover a wide range of postsecondary credentialing costs beyond traditional college and university programs. Under current law, 529 plans allow families to grow savings tax-free and withdraw earnings tax-free for “qualified higher education expenses,” which typically include tuition, fees, books, supplies, equipment, some room and board, and certain other defined education costs. Congress has gradually broadened 529 uses over the past decade (for example, to include K–12 tuition up to a cap, registered apprenticeship expenses, and limited student loan repayment). This bill takes another step by explicitly adding nondegree credentials and the costs associated with obtaining and maintaining them.

Mechanically, the bill amends Section 529(e)(3) of the Internal Revenue Code to add a new category of “qualified postsecondary credentialing expenses,” and inserts a new subsection (f) defining that term. In plain terms, families could use 529 funds for: (1) tuition, fees, books, supplies, and equipment required for enrollment or attendance in a recognized postsecondary credential program; (2) fees for exams required to obtain or maintain a recognized credential; and (3) fees for continuing education required to maintain such a credential. Notably, the bill aligns covered “other expenses” with those that would be covered if the student were enrolled in an “eligible educational institution,” ensuring parity of treatment for nondegree pathways.

A key feature is how the bill defines “recognized postsecondary credential program” and “recognized postsecondary credential” to build guardrails and minimize fraud. A qualifying program must meet at least one of four tests: be on a state Eligible Training Provider List under the Workforce Innovation and Opportunity Act (WIOA), be listed in the Department of Veterans Affairs’ WEAMS Public directory (programs approved for GI Bill use), be recognized by a reputable credentialing organization as preparing individuals for a required industry exam, or be identified by the Secretary (after consultation with the Secretary of Labor) as a reputable program. The credential itself must be among a broad but circumscribed set: an industry-recognized postsecondary employment credential (including credentials issued by programs accredited by the Institute for Credentialing Excellence/National Commission on Certifying Agencies or ANSI, or listed in the Department of Defense’s COOL directories), a U.S. Department of Labor–registered apprenticeship completion certificate, an occupational or professional license (or a prerequisite certification for such a license), or a credential meeting WIOA’s statutory definition.

In practical terms, this means 529 savings could be used for a wide array of short-term training and professional upskilling: for example, CompTIA or AWS cloud certifications, Project Management Professional (PMP) exam fees, EMT certification renewals, continuing medical education to maintain nursing or physician licensure, real estate licensing courses and exams, electrician apprenticeship-related costs, or other trade certifications recognized by states or DOL. The bill also covers fees for required continuing education and recertification exams, not just initial training, which is significant for working adults who must periodically maintain licensure.

The measure does not change contribution limits, distribution penalties, or the general tax treatment of 529 plans. Withdrawals for the newly covered expenses would be qualified and therefore tax-free; nonqualified withdrawals would still trigger taxes and a penalty on earnings. The bill applies to distributions made after enactment. It does not explicitly address state tax conformity; as with prior federal 529 expansions, states may need to update their own laws to ensure consistent state tax treatment, which could create a period of uneven implementation.

Supporters argue the bill modernizes 529 plans to reflect today’s labor market, where many high-value credentials come from nondegree programs, apprenticeships, or licensing pathways rather than traditional four-year colleges. By allowing exam fees and mandatory continuing education, the bill targets real costs that often fall on mid-career workers, veterans transitioning to civilian life, and adults changing careers. It also relies on existing federal and state quality filters—WIOA lists, VA approvals, apprenticeship registrations, and recognized accreditors—plus a backstop discretionary authority for the Secretary (in consultation with Labor) to identify reputable programs. The bipartisan sponsorship—spanning both parties and both chambers’ workforce and tax interests—reflects a broad appetite for skills-centered policy that is not limited to degrees.

Critics might note potential trade-offs. Expanding 529 eligibility is a tax expenditure that likely reduces federal revenue; the bill does not specify an offset. Because higher-income families are more likely to hold and contribute to 529s, benefits may skew toward households already positioned to save, raising equity questions. Some may worry the “recognized” definitions, while more protective than a blanket expansion, still leave room for low-quality providers or credential inflation, and that tax preferences could fuel price increases for exams and continuing education. Others may question whether subsidizing costs to obtain or maintain occupational licenses unintentionally reinforces licensing regimes some view as excessive barriers to entry.

Overall, H.R. 1151 would make 529 plans more flexible and better aligned with nondegree training routes, apprenticeships, and professional licensure maintenance, with a framework of recognized program lists and accrediting references intended to guard against abuse. The practical impact would be to reduce out-of-pocket costs for a wide variety of career-oriented credentials, especially for adults and veterans, while raising familiar debates about the distributional impact of 529 tax benefits and the proper role of the tax code in workforce policy.

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