The Skills Investment Act of 2025 expands Coverdell education savings accounts into lifelong learning accounts by broadening eligible expenses, adjusting contribution and age limits, and introducing new tax incentives for employers and individuals.
Glenn Thompson
Representative
PA-15
The Skills Investment Act of 2025 modernizes Coverdell education savings accounts into "Coverdell lifelong learning accounts," expanding their use to include a wide range of career and technical training expenses. The bill increases flexibility for adult learners by raising contribution age limits and introduces new tax incentives, including a business tax credit for employer contributions and a tax deduction for individual account holders. These changes aim to support workforce development and lifelong skill acquisition for Americans of all ages.
Skills Investment Act of 2025: New Tax-Free Savings for Job Training and 25% Employer Credits Launch in 2026
If you’ve ever looked at your old Coverdell Education Savings Account and wished you could use it for a coding bootcamp or a commercial driver’s license instead of just a college degree, this bill is for you. The Skills Investment Act of 2025 rebrands these as 'Coverdell Lifelong Learning Accounts' and essentially turns them into a flexible toolkit for the modern workforce. Starting January 1, 2026, the definition of what counts as a 'qualified expense' explodes. We’re talking about everything from technical training and career services to the hardware and fiber optic cable you need for your coursework. If you're 16 or older, you can tap into these funds for certification testing or adult literacy programs without the usual tax headaches.
A New Playbook for the Over-30 Crowd
For those of us well past our graduation years, the rules are getting a major refresh. Currently, Coverdell accounts usually have to be emptied by age 30, but this bill changes the game. You can now keep up to $10,000 in the account indefinitely to fund mid-career pivots or new certifications. Even better, the age limit for making contributions is jumping from 18 all the way to 70. This means if you’re a 45-year-old construction foreman looking to transition into project management software, you can contribute to your own account and take a tax deduction for it (Section 2). Just keep in mind that the stakes are higher if you use the money for a non-work emergency: the penalty for 'nonqualified' distributions is doubling from 10% to 20%.
The Boss Gets a Bonus
One of the most interesting parts of this bill is how it tries to get employers to chip in. It creates a new 25% tax credit for businesses that put money into their employees' Lifelong Learning Accounts. For a manager at a small tech firm or a shop owner, this is a direct incentive to help staff upgrade their skills without it being a total loss on the balance sheet. However, there’s a catch for the 'boss': if you’re a 5-percent owner, a major S-corp shareholder, or a relative of the owner, the company can’t claim this credit for contributions made to your account. It’s designed to benefit the broader workforce, not just the folks at the top of the org chart.
Practical Hurdles and Fine Print
While the bill is remarkably clear on definitions—linking 'eligible training' directly to existing laws like the Workforce Innovation and Opportunity Act—it does create a few new hoops. If your account balance stays over $10,000 after you hit 30, you’ll be required to start taking distributions for that excess amount. Additionally, once you hit 30, you can no longer swap the account to a new beneficiary (like a younger sibling or child). It’s a 'use it for yourself' model at that point. For most people juggling the costs of staying relevant in a fast-moving economy, these accounts could act as a dedicated 'career insurance' fund, provided you’re disciplined enough to keep the money earmarked for actual training.