The Biggest K12 Changes Under the One Big Beautiful Bill Act

Meeting President Trump's self-imposed deadline of July 4th, his "One Big Beautiful Bill" Act (OBBBA) was passed in dramatic form with Vice-President J.D. Vance casting the tie-breaker vote on July 3rd and signed by the President the next day.

There are really two significant direct K12 changes with a few indirect changes.

First, OBBBA includes a significant expansion of 529 savings plans—broadening how families can use these tax-advantaged accounts for K–12 education expenses, not just college. This one got a lot less press coverage.

Here's a breakdown of what’s in the bill:

🎓 What’s a 529 Plan?

A 529 plan is a state-sponsored savings account that lets families grow money tax-free if it’s used for qualified education expenses (traditionally college tuition, fees, and supplies).

🧾 What Does OBBBA Change?

✅ Expanded Qualified Uses for K–12

Under the OBBBA, 529 plan funds can now be used—without penalty—for a much broader range of K–12 education expenses, including:

• Tuition and fees for private or religious K–12 schools

• Tutoring and academic enrichment services

• Online education programs (including virtual schools and supplemental courses)

• Dual enrollment classes (college courses taken in high school)

• Special education services and therapies

• Textbooks, curricula, and other instructional materials

• Homeschooling expenses (including materials, tech, and services)

• Transportation to and from school

• Educational technology (like laptops, software, assistive devices)

💵 How Much Can Be Withdrawn?

The bill removes previous federal caps (which were $10,000 per year per student for K–12 tuition), effectively lifting limits and leaving it to states to impose any restrictions or oversight.

The second key K-12 change is:

🏫 Tax Credit for Private School Scholarships

🧾 What It Does

OBBBA also establishes a 100% federal tax credit for individuals and corporations who donate to Scholarship Granting Organizations (SGOs). These SGOs then provide scholarships (or vouchers) to students attending:

• Private schools (religious or secular)

• Some charter schools

• Homeschool cooperatives in some cases

💵 How the Tax Credit Works

• Dollar-for-dollar tax credit: Donors get every dollar back on their federal taxes for contributions made to SGOs—unlike a tax deduction, this directly reduces their tax bill.

• Annual cap per donor: Individuals can contribute up to $10,000, and married couples filing jointly can contribute up to $20,000.

• Corporate donors can give even more, with a higher cap (often tied to a percentage of taxable income).

• Program cap: The bill initially authorizes $10 billion per year in tax credits—though this could rise based on demand.

The bill overall is the first of it's kind establishing incentives at the federal level for school choice initiatives. The federal government is now incentivizing education through private donations and tax benefits instead of direct government payments.

Let's see how the theories play out in real life- they are often very different from what is assumed will happen. Keep checking back at K20Connect as we follow how these provisions impact education in reality.