529 College Savings Plans Can Now Cover Commuting and Parking Costs for Students and Apprentices

This legislation amends the Internal Revenue Code to expand what counts as a qualified expense for 529 college savings plans. Essentially, if you’re saving for higher education or an apprenticeship, you can now use those tax-advantaged funds to cover certain transportation and parking costs. This change applies to distributions made after the bill becomes law, giving families more flexibility when paying for school.

Finally, Acknowledging the Commute

For anyone who has ever had to commute to campus—whether driving an hour or taking public transit—you know those costs add up fast. This bill finally recognizes that reality. It allows 529 funds to be used for "reasonable travel expenses" required to get to an eligible educational institution or a registered apprenticeship program. This is a big deal for students who live off-campus or attend schools without robust housing options.

The Cost of Attendance Cap: The Fine Print

Before you start booking first-class flights, there’s a critical catch: the amount you can pull from the 529 for transportation is capped. The bill states that these expenses cannot exceed the amount the school includes as the "transportation allowance" when they calculate your total Cost of Attendance (COA). Every college has a COA figure they use for financial aid, and that number includes an estimate for books, housing, and, yes, travel. If your school estimates $1,500 a year for transportation, that’s your limit for using 529 funds for travel, regardless of your actual spending. This limitation keeps the benefit grounded in the school’s official budget and prevents abuse, but it also means you need to check your school’s COA breakdown.

Supporting the Skilled Trades

Crucially, this expansion isn't just for traditional college students. It also applies to those using 529 funds for registered apprenticeship programs. Apprentices often have to travel significant distances to job sites or training centers, and those expenses can be a real barrier to entry. By allowing 529 funds to cover these "reasonable transportation expenses" for apprentices, the bill helps lower the financial hurdle for people pursuing skilled trades. If you’re an apprentice, this means the money you saved can now help you get to the job site without dipping into your weekly paycheck.

What About Parking?

The bill also mentions "parking expenses" as a qualified distribution. While this sounds straightforward—paying for a campus parking pass or meter fees—it ties back to the same COA constraint. If the school includes parking in its official transportation or miscellaneous allowance, you're covered. If the school doesn't factor in parking, or if the IRS doesn't clarify this specifically, there could be some initial vagueness. However, for most commuter students who pay hundreds a year for a parking decal, this change offers a much-needed tax-free payment option, easing the burden on their current budget.