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HR 3574119th CongressIntroduced
To amend the Internal Revenue Code of 1986 to permit qualified distributions from section 529 plans for certain transportation and parking expenses.
Introduced: May 23, 2025
Economy & TaxesEducation
Standard Summary
Comprehensive overview in 1-2 paragraphs
This bill would expand the list of qualified expenses for 529 plans to include reasonable transportation costs (including parking) to attend an eligible educational institution, limited to the portion of the cost of attendance (COA) that the institution assigns to transportation. It also adds transportation expenses to the permissible costs for apprenticeship programs under 529 plans. The changes would apply to distributions made after the enactment of the bill. In short, families could use 529 funds to cover commuting and parking costs up to the institution’s transportation COA, potentially easing the cash burden for students who live off-campus or commute.
Key Points
- 1Qualified distributions from 529 plans would cover reasonable transportation expenses (including parking) to an eligible educational institution, not to exceed the student’s transportation portion of the institution’s COA.
- 2The transportation allowance is defined by the institution as part of the COA, per the Higher Education Act of 1965 (section 472), and the amount is determined by the institution.
- 3Transportation expenses would be added to qualified costs for apprenticeship programs, allowing similar treatment for individuals in apprenticeship tracks.
- 4The amendments apply to distributions made after the date of enactment.
- 5The bill uses “reasonable expenses” and institutional COA determinations, which introduces potential variability by school.
Impact Areas
Primary: Students and families using 529 plans who commute or pay for parking; individuals in apprenticeship programs.Secondary: Eligible educational institutions (colleges, universities, vocational schools) and 529 plan administrators; financial aid offices that reference COA. Potential effects on financial aid packaging and COA calculations.Additional impacts: Possible changes in tax planning for families (federal tax-free treatment of 529 distributions remains if used for qualified expenses), administrative considerations for verifying transportation-related disclosures, and variability across institutions in how transportation COA is calculated and published.
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